Donald Trump just approved a deal that lets the Chinese-built TikTok algorithm keep running in the U.S., even after all that noise about national security.
The same system lawmakers said was too risky is staying. But this isn’t a done deal yet, technically. What Trump signed was an executive order on Thursday that delays a ban for 120 days.
That ban was originally triggered by a law passed in spring 2024. So instead of pulling the plug, Trump bought time for Larry Ellison, Silver Lake, and others to finalize a structure that keeps the app alive, keeps the Chinese code running, and gives American investors a chance to make money off it.
Joint venture to run U.S. TikTok while algorithm stays Chinese
The plan is to carve out a separate “American TikTok,” run by a new joint venture controlled by U.S. people and U.S. firms. That version will no longer be under the thumb of ByteDance, but it will still run on ByteDance’s algorithm.
This is the same recommendation system that American officials have spent years warning about. Instead of writing new code, the U.S. will just retrain and monitor the existing algorithm.
The White House published a fact sheet saying, “the divestiture puts the operation of the algorithm, code, and content moderation decisions under the control of the new joint venture.” They added that all recommendation models using American user data will be retrained and overseen by “trusted security partners.”
What the sheet does not say is that a new algorithm will be built from scratch.
So the plan is to slap a U.S. security layer on top of a Chinese algorithm, call it American, and hope it works. There’s no clear answer yet on how deep this oversight goes. Will Larry and crew be able to fully audit the code, or are they managing a system they can’t fully see? And if ByteDance updates the algorithm, does the U.S. version follow those updates or stay frozen? No one knows yet.
U.S. data, at least, will be hosted in Oracle’s cloud centers, something that actually began in 2022. But that’s just storage. The real question is control. And control, right now, is being leased.
Investors secure equity, ByteDance locks in profits
The deal lets ByteDance keep its algorithm and get paid for it. Cryptopolitan reported the joint venture will license the tech, paying ByteDance 20% of revenue and up to 50% of profits. ByteDance also gets to hold a 20% equity stake in the U.S. business. That’s an ongoing payday.
JD Vance, the Vice President, told reporters the deal is valued at $14 billion. That’s way under Wall Street estimates, which had the U.S. TikTok piece pegged between $35 billion and $50 billion. That lowball figure only makes sense because ByteDance is getting long-term licensing money. They didn’t lose their engine. They just leased it.
Larry’s Oracle, Silver Lake, and MGX, an Abu Dhabi fund, will control 45% of the new company. A 5% slice is being held for a rotating list of investors that Trump said might include Rupert Murdoch and Michael Dell. “They’re great people,” Trump said at the signing ceremony, not hiding the political nature of the invites.
There’s already talk of a future IPO. If the company lists, it’s likely to go above $14 billion. Snap is sitting at $14 billion and doesn’t have nearly the same reach. And if ByteDance manages to pull this off, it could reopen its own IPO plans.
The company pulled back from listing in Hong Kong in 2021 after friction with Chinese regulators. With this American problem now outsourced and monetized, ByteDance could head back to the markets, licensing deal in hand.
Source: https://www.cryptopolitan.com/trump-to-allow-chinese-tiktok-algorithm/
