TikTok deal: 50 per cent of US revenue goes to ByteDance
With the spin-off of the US Tiktok business, the parent company secures a good source of income; it does not relinquish the core of the algorithm.
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The planned spin-off of the US Tiktok business from the Chinese parent company Bytedance is taking shape. A group of US and international investors is to receive 80 percent of the shares in the new company; Bytedance will retain 20 percent, but will remain the largest shareholder and should continue to make a good profit.
As the news agency Bloomberg writes, citing insiders, 50 percent of Tiktok's US revenues will flow to Bytedance. This may be compensation for the seemingly low valuation of the US business at USD 14 billion, which analysts had put at around USD 40 billion. According to the New York Times, the major investors include the IT group Oracle, the private equity firm Silver Lake, and the Abu Dhabi-based investment fund MGX; together they would hold 45 percent. Originally, it was planned that only US investors would be involved.
From the US side, nothing stands in the way of the takeover; US President Donald Trump cleared the way with a corresponding decree on Thursday. According to the decree, the agreements reached fulfill the requirements of the Tiktok Ban Act passed in 2024 under the Biden administration. The aim of this law was to prevent the Chinese government from accessing the data of US citizens and also to place the Tiktok recommendation algorithm under the control of local companies.
China's approval is still pending
However, it is unclear whether the Chinese government will also approve the deal and how far the new owners' influence on the recommendation algorithm will actually go in this case. Meanwhile, there is only talk of Tiktok USA licensing the algorithm and retraining it with data from US users. This data would be stored locally on US servers.
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The algorithm itself, the data on which the basic training is based and the development of updates would therefore remain under the control of Bytedance. It is not known how extensive and detailed the US operators' insights into the functioning of the Tiktok centerpiece will be. As with all large, successful platforms, Tiktok's recipe and secret for success lies in its algorithm. This decides what content users get to see and, above all, it has learnt how to keep the predominantly young audience in the app for as long as possible.
It is therefore essential for Bytedance and the Chinese government to protect this part of the app by all means. According to Bloomberg, neither has yet agreed to the sale under the conditions mentioned. The Chinese embassy merely stated that the Americans "must offer Chinese investors an open, fair and non-discriminatory environment".
(atr)
