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A highly anticipated agreement regarding TikTok may be imminent, with US President Donald Trump and Chinese President Xi Jinping expected to discuss the terms on Friday.
Senior officials from both nations reportedly reached a “framework” agreement this week, which could potentially lead to the sale of TikTok’s US operations to a consortium of American firms.
If finalized, the deal would represent what one expert termed a “rare breakthrough” in US-China trade negotiations, resolving an issue that has garnered significant attention for several years.
The BBC has consulted experts to analyze the potential implications of a final agreement for TikTok’s 170 million US users, as well as the potential benefits for Beijing.
Chinese state media outlets are characterizing the potential deal as a “win-win” for both countries, while President Trump has stated, “I’d like to do it for the kids.”
However, considerable uncertainty remains surrounding specific details.
Reports indicate that US users would be offered a new, US-specific version of the application. Furthermore, TikTok’s US operations could be acquired by a consortium that includes technology giant Oracle, along with investment firms Andreessen Horowitz and Silver Lake. The BBC has reached out to these companies for comment.
The core issue at the heart of the negotiation revolves around TikTok’s algorithm – the proprietary technology that recommends content to users based on their individual preferences and behaviors.
This algorithm is crucial to the app’s widespread popularity and rapid growth. While other companies have attempted to replicate this functionality – for instance, Instagram with Reels and YouTube with Shorts – they have not achieved the same level of success, according to a former social media executive who previously worked for Snap and Viber. This individual spoke to the BBC on the condition of anonymity.
“Generally, the one who introduces the technology just knows how to do it better.”
TikTok’s parent company, ByteDance, has understandably resisted relinquishing control of this valuable technology, with Beijing offering its support.
However, in a surprising development, China’s leading cybersecurity regulator has indicated that Beijing may permit ByteDance to license the algorithm and other intellectual property to a US company owner, but will not allow its outright transfer.
This marks a significant shift from China’s previous rigid stance regarding the algorithm.
However, computing expert Kokil Jaidka suggests that the US version may operate using a “stripped-down” version of the app’s software.
Even limited access to the algorithm could reveal insights into how the technology drives user engagement, content moderation, and targeted advertising – all crucial components of the app’s profitability, she adds.
“It simply doesn’t make business sense for ByteDance to hand over its most valuable asset when a lighter version can keep the app running without giving away its edge.”
Ms. Jaidka also notes that these modifications could potentially affect the user experience, leading to a less diverse range of content compared to other versions of the app.
“A lighter, slower, more domestic version – while ByteDance keeps the crown jewels in Beijing.”
US Treasury Secretary Scott Bessent, who leads the US negotiating team, asserts that the user experience will remain consistent, while incorporating “Chinese characteristics.”
The incorporation of “Chinese characteristics” may present a challenge, given that this phrase is often employed by the Chinese Communist Party to distinguish its unique approach to various matters.
US officials, including Trump during his first term, have consistently expressed concerns regarding data access on TikTok and the app’s potential influence over US users.
These national security concerns prompted legislation, signed into law last year by former President Joe Biden, requiring TikTok to relinquish control of its US operations or face a ban.
Trump has since reversed his position, attributing his 2024 election victory to TikTok’s contribution to boosting young voter support.
However, any sale must still receive approval from US lawmakers and address the concerns that initially sparked the debate. Congressional approval is likely required for any agreement, and there is already political opposition in Washington from both sides of the aisle.
Republican lawmaker John Moolenaar has voiced concerns that the agreed-upon framework might still permit Chinese government influence and control.
Lawyer Hdeel Abdelhady told the BBC, “Put simply: the statute requires full separation from ‘foreign adversary’ control, and a license would not appear to meet that test.”
Deals of this magnitude typically require months or even years to finalize, with numerous issues needing resolution.
One unresolved issue is how a US-owned and operated TikTok would interact with the global TikTok platform, which would remain under ByteDance’s ownership.
Additionally, ByteDance, as a private company, would need board approval for the arrangement to proceed.
This introduces another level of complexity, even if the Chinese government – which enforces export controls on advanced technologies like algorithms – has already given its approval.
Furthermore, the US president himself, who has demonstrated a history of unpredictable trade negotiations, could introduce new obstacles.
We know Trump is keen on a TikTok deal, and we know why.
It would be a significant achievement for his administration. The app boasts a user base of one in seven people globally and functions as a vast marketplace for buyers and sellers across the world, from the US to Germany, Indonesia to the Philippines.
The former social media executive stated, “This is the only social media app that didn’t originate in the US and so it’s very valuable.”
He added that the average revenue per user for most social media apps in the US is five to 10 times higher than other countries, with America likely making up something close to 50% of ByteDance’s overall revenue.
Tech news site The Information estimated ByteDance’s global revenue to be $39bn (£28.6bn) in 2024, with TikTok accounting for $30bn.
The outstanding question is what benefits China would derive from such a deal.
Computer scientist Ben Leong stated that the licensing agreement will enable ByteDance to maintain control over its algorithm, providing a strategic advantage if the US intends to launch competing apps.
Furthermore, TikTok avoids a ban and remains accessible in the US market. TikTok’s parent company would also retain the single biggest stake in the app, along with the logo, format and branding.
Investor and tech expert Kevin Xu wrote in his recent newsletter that the deal also creates a “TikTok Template” for other Chinese companies to deploy their technology in the US through licensing.
He added that ready-to-go Chinese technologies that matter to national competitiveness, like batteries and rare earths, could now flow to the US more easily.
“This is the formula that will likely be applied should, say, BYD want to make a jump into the US market, or CATL want to step up its expansion to supply more US carmakers with its batteries.”
China can present the deal as a victory, exporting Chinese-developed technology on its own terms. This could provide Beijing with significant leverage in trade negotiations with Washington.
Former World Bank Country Director for China Bert Hofman stated, “The Chinese side have called the talks in depth, constructive and candid. That signals that they are actually quite happy with how things are going. Question is when will there be a full deal?”
A TikTok deal could buy them time for exactly that. The US is a huge export market for China, and China is a major buyer of American agricultural goods. High tariffs would hurt both. There are also export controls on both sides, especially restricting US access to rare earths, which China has a near monopoly over.
Ultimately, a breakthrough on TikTok appears to represent progress for China. The US may secure an agreement, but it might not be the complete victory President Trump had envisioned.
Ms. Jaidka stated, “The deal might work on paper – but in practice, it will always sit under a cloud.”
“A US TikTok will look like the same app, but behind the scenes it will run on borrowed code, firewalled data, and political trust that could vanish overnight.”
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