US may get TikTok but will China control algo that powers its feed?

As Donald Trump pushes to keep Chinese social media app TikTok running in the United States, the deal with Beijing involves investments from major US venture capital firms, private equity funds and tech companies, CNN reported citing people familiar with the discussions. The investors would form a new US-based company to operate the app domestically.

The framework, negotiated this week in Madrid between US and Chinese officials, is similar to a deal presented to Trump in April. That earlier attempt collapsed after Trump imposed steep tariffs on China, disrupting talks.

Under the current proposal, US investors would hold about 80 per cent of TikTok, while Chinese shareholders would retain the rest. Oracle, Andreessen Horowitz and Silver Lake are among the expected investors. The consortium would be overseen by a US-majority board, including a member appointed by the Trump administration.

The Wall Street Journal first reported details of the Madrid talks. Sources cautioned the framework could still change before Trump and Chinese President Xi Jinping speak by phone on Friday, when the deal is expected to be finalized.

“Any details of the TikTok framework are pure speculation unless they are announced by this administration,” a senior White House official told CNN.

Larry Ellison’s role in the talks

Oracle’s executive chairman Larry Ellison, who recently topped the global rich list, has long been linked to efforts to acquire TikTok’s US assets. Trump has openly backed Ellison, a supporter, as a potential buyer. Oracle already hosts TikTok’s US data and nearly bought the app in 2020 under Trump’s first administration before that deal was blocked.

While Trump initially floated a 50-50 joint venture between ByteDance and a US buyer, the law passed under Joe Biden limits Chinese ownership to no more than 20% of TikTok’s US assets.

Trump extends ban deadline

As negotiations continue, Trump signed an executive order on Tuesday extending the TikTok ban deadline by three months. That action could be overridden if the sale to an American-backed consortium is completed.

Trump also claimed his administration had already secured a deal with China to keep TikTok running in the US, though details remain unclear. Chinese officials have suggested Beijing may retain control of TikTok’s core algorithm.

“We have a deal on TikTok … We have a group of very big companies that want to buy it,” Trump said Tuesday, without elaborating.

Algorithm remains sticking point?

The Madrid talks were led by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. Reports say TikTok’s US assets would shift from ByteDance to American ownership.

But the central question remains the fate of TikTok’s algorithm, the key to its global success.

At a press conference in Madrid, Wang Jingtao, deputy head of China’s cyber security regulator, said the deal framework included “licensing the algorithm and other intellectual property rights.” ByteDance, he added, would “entrust the operation of TikTok’s US user data and content security.”

Some analysts believe this means the US spinoff will still rely on the Chinese algorithm. That aligns with arguments made before the US Supreme Court in January, when ByteDance’s lawyer warned it would be nearly impossible to sell TikTok outright, since Chinese law restricts the transfer of its proprietary algorithm.