The United States and China have tentatively agreed on a framework that aims to resolve the long-standing dispute over the popular video-sharing app TikTok. The agreement addresses data security concerns and proposes a restructuring of ownership for TikTok's American operations. This framework marks a potential breakthrough in the U.S.-China trade relationship and the ongoing debate about the app's future in the United States.

Key Components of the Framework

• Data Security: A core element of the agreement focuses on ensuring the security of data belonging to TikTok's U.S. users. The framework seeks to address Washington's concerns that the Chinese government could potentially access this data through TikTok's parent company, ByteDance, for espionage or to influence public opinion. Oracle is expected to continue managing user information at its data centers based in Texas.
• Ownership Restructuring: The proposed framework involves a significant shift in the ownership structure of TikTok's U.S. operations. A consortium of U.S. investors, potentially including Oracle, Silver Lake, and Andreessen Horowitz, would hold a majority stake, estimated at around 80%. ByteDance would retain a minority stake, reportedly just under 20%, which is below the threshold that would allow the company to control the U.S. entity.
• Governance and Control: The new U.S.-based TikTok entity would be governed by a board of directors with a majority of American members. There are reports that the U.S. government may appoint a member to the board. This governance structure aims to ensure that Americans have control over TikTok's operations in the United States.
• Algorithm and Technology: One of the more complex aspects of the deal involves TikTok's algorithm, which is central to the app's popularity and user experience. China will allow the licensing of TikTok's algorithm and related intellectual property. The specifics of how the algorithm will be managed and controlled remain unclear, but the agreement suggests that ByteDance will license the algorithm, and U.S. engineers will recreate it.
• New App Version: Current TikTok users in the U.S. may be required to migrate to a dedicated American version of the app. This new app, while visually similar to the existing one, would operate independently on American servers, utilizing U.S.-managed algorithms.

Political and Economic Context

The tentative agreement comes after a period of intense scrutiny and pressure on TikTok from U.S. lawmakers and regulators. Concerns about potential national security risks have led to legislation aimed at forcing ByteDance to divest from TikTok's U.S. operations. Former President Joe Biden signed a law in 2024 that would ban TikTok unless ByteDance sold its controlling stake. President Trump has extended the deadline for ByteDance to divest its U.S. app to a U.S. owner to December 16.

The TikTok issue has also become intertwined with broader U.S.-China trade relations. The agreement was reached during trade talks between U.S. and Chinese officials in Madrid. China has stressed that resolving the TikTok issue should not be accompanied by continued suppression of Chinese companies.

Remaining Uncertainties

While a framework has been established, several details remain to be worked out. The agreement is not final and awaits approval from President Trump and Chinese President Xi Jinping, who are scheduled to discuss the matter. The specifics of the algorithm's management, the ownership structure, and the technology licensing arrangements are also subject to further negotiation.