After years of political drama and threats of a nationwide ban, the Chinese-owned app TikTok is finally close to a deal that could keep it alive for its 170 million American users.
The framework agreement hammered out during trade talks in Madrid this week would essentially create a new American version of TikTok.
Oracle, the tech giant already hosting TikTok’s user data in Texas, would team up with private equity firm Silver Lake and venture capital powerhouse Andreessen Horowitz to control the app’s future in the US.
Roughly 80% of the new company would belong to American investors, leaving ByteDance’s Chinese shareholders with just under 20%. That number satisfies the 2024 law that demanded ByteDance either sell or face a ban in America.
ByteDance’s existing American investors, including firms like Susquehanna International and KKR, would keep their stakes in the new structure.
Beyond ownership, American users would need to migrate to an entirely new app that TikTok engineers have been secretly building and testing.
This new platform would recreate the recommendation algorithms that made TikTok addictive in the first place, but using technology licensed from ByteDance rather than directly controlled by the Chinese parent company.
Oracle would get to keep its lucrative cloud services contract, continuing to store American user data at its Texas facilities as part of what TikTok calls Project Texas.
The new American entity would also have an American-dominated board with one member designated by the US government, adding another layer of oversight.
This deal is a significant concession from China, which had previously resisted any arrangement that would hand control of TikTok’s prized algorithm to American companies.
Wang Jingtao, deputy director of China’s top cyberspace regulator, confirmed that Beijing was now open to licensing the algorithm and other intellectual property rights.
READ: TikTok U.S. Takeover: The Price, The Players, and The Politics
Donald Trump, who tried to ban TikTok during his first presidency, has completely flipped his position after crediting the app with helping him win younger voters in the 2024 election.
He’s already granted four extensions to the divestiture deadline, the latest pushing it back to December 16. This pattern has raised legal questions since the original law only allowed for one 90-day extension.
TikTok’s American operations have been valued between $35 billion and $40 billion, though tech valuations have climbed rapidly with the AI boom.
ByteDance as a whole hit a record internal valuation of around $330 billion in August, with about a quarter of its $91 billion in revenue coming from outside China.
If the deal goes through, it would end a years-long saga that entangled TikTok in broader US-China trade tensions. Without an agreement, any potential meeting between Trump and Chinese President Xi Jinping would have been off the table.
The two leaders are expected to finalize the accord during a call scheduled for Friday.
It’s worth noting that the arrangement still needs final approval from both governments, and details about exact ownership percentages and the transition timeline remain unclear.
