WASHINGTON (TNND) — TikTok reached a deal with a group of investors to bring an end to a long-running legal saga and keep it running in the U.S. despite national security concerns over its connections to China that led Congress to ban it if it didn’t divest.
A deal announced on Thursday will keep one of the most popular apps in the country, with around 200 million American users, operating into the future after years of consternation about the potential exposure of their data to China through a national security law that could compel TikTok parent company ByteDance to deliver it to the Chinese government. ByteDance and TikTok denied repeatedly that it would comply with such an order, but those assurances did little to soothe the apprehension.
The short-form video app will be operated in the U.S. by a new entity controlled by a majority of investors from the United States. Its investors include Oracle; Emirati investment firm MGX; and Silver Lake, another investment firm, that own more than 80% of the new venture. ByteDance will still control around 20%. A majority of the board for the new TikTok will also be American.
The deal resolves years of uncertainty about the app’s future after members of Congress and the intelligence community had growing concerns about its connections to China and whether it could be weaponized against the United States. Concerns were high enough that broad bipartisan majorities passed a law banning it from operating in America if ByteDance didn’t find a new owner. It went dark for about half a day as the initial law’s deadline approached until it became clear the deadline would be delayed.
President Donald Trump praised the deal his administration helped broker in a post on Truth Social, where he also thanked Chinese President Xi Jinping for allowing it to move forward.
“I am so happy to have helped in saving TikTok!” he wrote. “I only hope that long into the future I will be remembered by those who use and love TikTok.”
Trump, who had sought to ban the app during his first term, signed an executive order on his first day in office to keep it operating and extended the deadline several more times as talks continued.
It’s unclear whether the deal will materially change how the app functions in America or if its users will see a different experience. U.S.-based users will continue to use the same app. ByteDance’s continued involvement also raises questions as to whether it is enough to address the national security concerns that sparked the ban.
TikTok said in its announcement that the new venture will “operate under defined safeguards that protect national security.” The safeguards include having U.S. user data stored locally and run by Oracle, which will also have a role in updates to the app’s algorithm.
“This seems to have a higher probability of protecting American interests and privacy than the status quo before,” said John Wihbey, an associate professor of media innovation at Northeastern University. “Whether it actually will is unknown at this point.”
There are also questions about what will happen to TikTok’s coveted and highly effective algorithm that decides what kind of content to display in feeds and drove the app’s popularity. Its inclusion in a sale was a hotly contested issue with ByteDance and the Chinese government throughout the process.
How to deal with the algorithm has been a central issue in determining TikTok’s future. China had been adamant that it must stay under Chinese control by law after it amended its export control list to include algorithms and source codes, essentially giving it a veto over any sale.
Under the deal, ByteDance will license the algorithm to the new U.S. entity for new training. According to the announcement, the new venture will “retrain, test, and update the content recommendation algorithm on U.S. user data.” The bill former President Joe Biden signed into law mandated the divestment to end any “operational relationship” between ByteDance and TikTok in the U.S., raising questions as to whether the new arrangement will satisfy that requirement.
“It’s unclear what that actually means, because Congress has said there’s supposed to be a clean break, a clean divestiture, but there is some ambiguity about what licensing an algorithm means and how, once it’s retrained, it could be updated,” Wihbey said. “If the app is largely the special sauce of the algorithm, this raises big questions about whether the deal is actually in compliance with what Congress mandated.”
Some lawmakers already asked for an investigation into whether the new venture will actually address the national security concerns that led to the ban.
“After over a year of Donald Trump illegally extending the TikTok deadline, this TikTok deal raises many more questions than answers,” said Sen. Ed Markey, D-Mass. “Congress has a responsibility to investigate this deal, demand transparency, and ensure that any arrangement truly protects national security while keeping TikTok online.”
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