Algorithm remains in China: US TikTok to go to Oracle consortium

The US offshoot of TikTok is to be taken over by a consortium consisting of Oracle, the investment companies Andreessen Horowitz and Silver Lake as well as previous investors in ByteDance. Meanwhile, the coveted algorithm will remain in Chinese hands and will be licensed to the new US operators for their version. Users in the USA will also be able to switch apps. These are the key points of the agreement between the US government and China, reports the Wall Street Journal, among others. The agreement is now to be finalized at full speed, with US President Donald Trump postponing the ban on TikTok for the fourth time on Tuesday.

Trump renounces algorithm

Trump himself has announced that he intends to discuss the agreement with China's head of state, Xi Jinping, this Friday. The agreement was reached in recent days during negotiations in Madrid, but Oracle, for example, had already put itself forward as an interested party at the beginning of the year. According to CNBC, it is assumed in the USA that the final details of the agreement will be clarified in the next 30 to 45 days. In principle, the deal was already negotiated in the spring, but then the Chinese side hit the brakes due to Donald Trump's tariff policy and delayed further progress.

According to the Wall Street Journal, users in the USA are to switch from TikTok to a new app. This is already being developed and tested. The algorithms of the original app are being adapted for this, with a license from the previous owner, ByteDance. “Ultimately, China will keep the algorithm,” the Financial Times quotes a person involved in the negotiations as saying, adding that Trump has backed down here. Content from the USA will remain available on TikTok in the rest of the world “and vice versa.” Oracle will retain its role as TikTok's technical service provider in the USA. The US consortium around Trump supporter Larry Ellison's software group is to hold 80 percent of the US business, with ByteDance still holding 20 percent.

According to a bipartisan law, TikTok's US business should have been sold by ByteDance by January 19—or taken offline in the US. However, Trump granted an additional 75 days as soon as he took office in January. US authorities were instructed not to implement the law for now. Trump then extended the grace period further and further, although there was no legal basis for this. Even the first 75 days were not covered by the document: it only provided for a one-off extension of 90 days if sales negotiations went well. According to the latest announcements, the pause that has now been ordered looks like the first to fulfill this requirement.

Concerns about Chinese influence

TikTok's parent company, ByteDance, is considered a Chinese company in the USA. ByteDance itself has repeatedly pointed out that the majority of its investors come from abroad. However, the group has a large headquarters in Beijing and is therefore also bound by many legal requirements of the People's Republic. This is why the only major social network that is not owned by a US company is considered a security threat there. One of the concerns is that China's government could use it to influence public opinion. This is why the US Congress ordered the US business to be sold, which China initially strongly opposed.

(mho)