A long-awaited deal over TikTok appears close. US President Donald Trump and Chinese leader Xi Jinping are set to discuss terms on Friday.
Officials from both sides recently struck a “framework” agreement. Reports suggest TikTok’s American operations could be sold to a group of US investors.
If finalised, one expert called it a “rare breakthrough” in trade relations. It could also end a dispute that has dominated for years.
Analysts now examine what the deal means for TikTok’s 170 million US users, and what Beijing stands to gain.
Algorithm at the centre of negotiations
Chinese media outlets praised the talks as “win-win”. Trump said, “I’d like to do it for the kids”.
But major details remain unsettled. Reports indicate a US-only TikTok could emerge. Oracle, Andreessen Horowitz and Silver Lake may be part of the purchase.
The key issue is TikTok’s algorithm. It recommends videos and drives the app’s success. Rivals like Instagram Reels and YouTube Shorts attempted similar features, but with limited success, a former industry executive explained.
“Generally, the one who introduces the technology just knows how to do it better,” the insider said.
ByteDance, TikTok’s Chinese parent, refused to sell the prized formula. Beijing backed that position.
In a surprising twist, China’s cybersecurity regulator hinted ByteDance could license the technology to an American firm. But full ownership would stay in Beijing.
That marks a sharp change from China’s earlier hardline approach.
Still, the US might only receive a reduced version of the app, said Kokil Jaidka, computing expert at the National University of Singapore.
Even limited access could expose how TikTok manages engagement, moderation and advertising.
“It makes no sense for ByteDance to hand over its most valuable asset when a lighter version keeps TikTok running,” Dr Jaidka argued.
Such changes could alter the user experience. Americans may see less diverse content than users elsewhere.
“A lighter, slower, more domestic version – while ByteDance keeps the crown jewels in Beijing,” she added.
Political obstacles could stall progress
US Treasury Secretary Scott Bessent, who leads Washington’s side, said TikTok will keep “Chinese characteristics”. Beijing often uses that phrase to underline its approach.
US officials have raised concerns for years about data security and the app’s influence on American users. Those fears drove a law signed by former president Joe Biden, demanding TikTok give up control or face a ban.
Trump later shifted his stance, praising TikTok for energising young voters in his 2024 campaign.
But Congress still needs to approve any agreement. Political opposition is already building.
Republican lawmaker John Moolenaar warned the framework might still leave Chinese control.
“Put simply: the statute requires full separation from ‘foreign adversary’ control,” lawyer Hdeel Abdelhady explained. “A license does not appear to meet that test.”
Deals of this size often take months or years. Several issues remain unresolved.
How will a US-owned TikTok connect with the global version still run by ByteDance? Will ByteDance’s board agree?
Despite Beijing’s apparent approval, ByteDance’s private ownership complicates matters.
And Trump’s unpredictable approach to trade could cause new challenges.
Beijing uses TikTok as strategic leverage
Trump sees clear benefits in closing a TikTok deal.
The app reaches one in seven people worldwide. It also acts as a marketplace linking buyers and sellers across the US, Europe and Asia.
“This is the only major social media app not created in the US, so it’s highly valuable,” the former executive said.
American users provide the highest profits. Revenue per user in the US is five to ten times higher than elsewhere. America may make up almost half of ByteDance’s revenue.
Tech outlet The Information estimated ByteDance’s 2024 revenue at $39bn, with TikTok accounting for $30bn.
What does China get?
Licensing allows ByteDance to keep its algorithm secure in Beijing. That advantage matters if America develops rival apps, said computer scientist Ben Leong.
And TikTok stays active in the US market. ByteDance retains its largest stake, brand and design.
Investor Kevin Xu described the deal as a “TikTok Template”. Other Chinese firms could apply the same model to expand in America.
Industries like batteries and rare earths may follow.
“This is the formula for companies like BYD or CATL to grow in the US,” Xu explained.
Beijing can present the agreement as a success: exporting Chinese technology under its own conditions. That offers valuable leverage in trade talks with Washington.
Former World Bank director Bert Hofman noted, “The Chinese side called the talks in depth, constructive and candid. That shows they are pleased. The question is when a full deal arrives.”
For Beijing, the arrangement buys time. The US is a crucial export market, while China relies heavily on American agricultural imports. Tariffs would hurt both sides.
Export restrictions add further strain, especially rare earths where China holds dominance.
For now, TikTok represents progress for China. The US may secure a deal, but not the sweeping win Trump hoped for.
“The deal might work on paper, but it will always sit under a cloud,” Dr Jaidka warned.
“A US TikTok may look the same, but it will run on borrowed code, firewalled data and fragile political trust.”
