I was reading a interesting article about how china may still hold leverage over TikTok. I think so, because there is no way China would have given up TikTok so easily.
This latest ‘framework consensus’ still leaves China with significant leverage over TikTok.
After four extensions of the statutory deadline to ban TikTok or force its Chinese owners to divest, President Donald Trump has now signed an executive order transferring the app to U.S. ownership.
The announcement follows years of diplomatic sparring, bureaucratic maneuvering, repeated efforts by federal and state governments to curtail the platform and even a ruling from the U.S. Supreme Court. Has the fate of America’s most viral social-media app finally been decided?
Those expecting closure will be disappointed. This latest “framework consensus” still leaves China with significant leverage over TikTok. What looks like a victory for the United States may well be Chinese President Xi Jinping’s biggest strategic triumph yet.
On the surface, the agreement does look like a grand bargain for America. Oracle
and a consortium of U.S. investors would control 80% of a newly created American entity that would run TikTok’s operations in the U.S. All U.S. user data would remain on Oracle’s servers in Texas, and the new company would license TikTok’s prized recommendation algorithms and retrain them on American data. Six of the entity’s seven board seats will be held by Americans.
In other words, Americans’ data and TikTok’s servers and algorithms would all appear to be firmly under U.S. control. And the deal even carries financial rewards for the Trump administration, in the form of a multibillion-dollar payment from investors (effectively a fee for brokering the settlement with the Chinese).
The intellectual property behind TikTok’s algorithms remains firmly in Chinese hands.
Look more closely, however, and the picture is less reassuring. After all, global investors already own roughly 60% of ByteDance, TikTok’s parent company, while the company’s founders own another 20% and its employees hold the remaining 20%.
The deal merely raises U.S. ownership of the American operation to 80%, leaving ByteDance with just under 20% — but it is still the single largest shareholder. More tellingly, the intellectual property behind TikTok’s algorithms remains firmly in ByteDance’s hands. Far from acquiring the recommendation engine outright, Oracle and other U.S. investors are only receiving a licensed copy.
Algorithms are not static assets. Unlike a car or a house, they cannot be transferred once and for all. They are dynamic, data-driven systems that demand constant retraining and fine-tuning along with significant engineering support to remain effective. Oracle may be able to inspect the code, copy it in full and retrain the licensed version on U.S. data. But the new American TikTok will still depend on China for periodic updates. This raises difficult questions: Will Oracle even receive those updates? And, if so, can it meaningfully monitor and audit them?
To be sure, what makes an algorithm powerful is not only its architecture but also the data on which it is trained. Yet because the U.S. version will rely solely on American user data, Oracle will lack access to the vast global dataset that makes ByteDance’s cutting-edge models so powerful.
China will hold the legal levers to restrict or impose conditions on any transfer of ByteDance’s technology.
China, meanwhile, will hold the legal levers to restrict or impose conditions on any transfer of ByteDance’s technology. Since 2020, China has classified personalized recommendation algorithms as sensitive technology under its export-control regime. That means every export of updates or improvements to TikTok’s algorithm is subject to Chinese government approval.
The Chinese authorities therefore can make TikTok a diplomatic tool. Should tensions rise over Taiwan, tariffs, Ukraine or restrictions on exports of Nvidia
chips, for example, China could delay or withhold licensing approvals, using TikTok as yet another bargaining chip. In this way, TikTok has been transformed into a powerful instrument of Chinese statecraft.
Faced with a licensing arrangement that is governed less by legal terms than by shifting geopolitical winds, U.S. investors in the new TikTok should brace themselves for heightened uncertainty. Rather than shifting TikTok from Chinese to American control, this deal merely replaces one form of dependence with another.
It’s true that ByteDance will no longer oversee daily content recommendations. Oracle will, easing the U.S. government’s most immediate security concerns. But China will retain residual control over TikTok’s algorithms. It has the freedom to set the scope of the license, determine the frequency of updates and decide whether the U.S. version can keep pace with the global one. Far from diminishing China’s influence, the deal risks entrenching it.
With this agreement, the fear of Chinese access to Americans’ data or direct manipulation of algorithms may fade. But it will be replaced by a subtler and more enduring risk: technological dependence on China, which retains a chokehold on TikTok’s powerful recommendation engine. The Trump administration has simply traded one vulnerability for another.
That said, a less competitive U.S. version of TikTok might not be bad for America. Some may even see it as a blessing in disguise. A less competitive TikTok would be a less addictive TikTok. That would ultimately benefit American teenagers — whether or not they realize it.
This latest ‘framework consensus’ still leaves China with significant leverage over TikTok.
After four extensions of the statutory deadline to ban TikTok or force its Chinese owners to divest, President Donald Trump has now signed an executive order transferring the app to U.S. ownership.
The announcement follows years of diplomatic sparring, bureaucratic maneuvering, repeated efforts by federal and state governments to curtail the platform and even a ruling from the U.S. Supreme Court. Has the fate of America’s most viral social-media app finally been decided?
Those expecting closure will be disappointed. This latest “framework consensus” still leaves China with significant leverage over TikTok. What looks like a victory for the United States may well be Chinese President Xi Jinping’s biggest strategic triumph yet.
On the surface, the agreement does look like a grand bargain for America. Oracle
and a consortium of U.S. investors would control 80% of a newly created American entity that would run TikTok’s operations in the U.S. All U.S. user data would remain on Oracle’s servers in Texas, and the new company would license TikTok’s prized recommendation algorithms and retrain them on American data. Six of the entity’s seven board seats will be held by Americans.
In other words, Americans’ data and TikTok’s servers and algorithms would all appear to be firmly under U.S. control. And the deal even carries financial rewards for the Trump administration, in the form of a multibillion-dollar payment from investors (effectively a fee for brokering the settlement with the Chinese).
The intellectual property behind TikTok’s algorithms remains firmly in Chinese hands.
Look more closely, however, and the picture is less reassuring. After all, global investors already own roughly 60% of ByteDance, TikTok’s parent company, while the company’s founders own another 20% and its employees hold the remaining 20%.
The deal merely raises U.S. ownership of the American operation to 80%, leaving ByteDance with just under 20% — but it is still the single largest shareholder. More tellingly, the intellectual property behind TikTok’s algorithms remains firmly in ByteDance’s hands. Far from acquiring the recommendation engine outright, Oracle and other U.S. investors are only receiving a licensed copy.
Algorithms are not static assets. Unlike a car or a house, they cannot be transferred once and for all. They are dynamic, data-driven systems that demand constant retraining and fine-tuning along with significant engineering support to remain effective. Oracle may be able to inspect the code, copy it in full and retrain the licensed version on U.S. data. But the new American TikTok will still depend on China for periodic updates. This raises difficult questions: Will Oracle even receive those updates? And, if so, can it meaningfully monitor and audit them?
To be sure, what makes an algorithm powerful is not only its architecture but also the data on which it is trained. Yet because the U.S. version will rely solely on American user data, Oracle will lack access to the vast global dataset that makes ByteDance’s cutting-edge models so powerful.
China will hold the legal levers to restrict or impose conditions on any transfer of ByteDance’s technology.
China, meanwhile, will hold the legal levers to restrict or impose conditions on any transfer of ByteDance’s technology. Since 2020, China has classified personalized recommendation algorithms as sensitive technology under its export-control regime. That means every export of updates or improvements to TikTok’s algorithm is subject to Chinese government approval.
The Chinese authorities therefore can make TikTok a diplomatic tool. Should tensions rise over Taiwan, tariffs, Ukraine or restrictions on exports of Nvidia
chips, for example, China could delay or withhold licensing approvals, using TikTok as yet another bargaining chip. In this way, TikTok has been transformed into a powerful instrument of Chinese statecraft.
Faced with a licensing arrangement that is governed less by legal terms than by shifting geopolitical winds, U.S. investors in the new TikTok should brace themselves for heightened uncertainty. Rather than shifting TikTok from Chinese to American control, this deal merely replaces one form of dependence with another.
It’s true that ByteDance will no longer oversee daily content recommendations. Oracle will, easing the U.S. government’s most immediate security concerns. But China will retain residual control over TikTok’s algorithms. It has the freedom to set the scope of the license, determine the frequency of updates and decide whether the U.S. version can keep pace with the global one. Far from diminishing China’s influence, the deal risks entrenching it.
With this agreement, the fear of Chinese access to Americans’ data or direct manipulation of algorithms may fade. But it will be replaced by a subtler and more enduring risk: technological dependence on China, which retains a chokehold on TikTok’s powerful recommendation engine. The Trump administration has simply traded one vulnerability for another.
That said, a less competitive U.S. version of TikTok might not be bad for America. Some may even see it as a blessing in disguise. A less competitive TikTok would be a less addictive TikTok. That would ultimately benefit American teenagers — whether or not they realize it.
