Why Trump’s TikTok deal will be music to China’s ears

After four extensions of the statutory deadline to ban TikTok or force its Chinese owners to divest, US President Donald Trump has now signed an executive order transferring the app to US ownership. The announcement follows years of diplomatic sparring, bureaucratic manoeuvring, repeated efforts by federal and state governments to curtail the platform and even a ruling from the US Supreme Court. Has the fate of America’s most viral social media app finally been decided?

Those expecting closure will be disappointed. This latest “framework consensus” still leaves China with significant leverage over TikTok. What looks like a victory for the United States may well be President Xi Jinping’s biggest strategic triumph yet.

On the surface, the agreement does look like a grand bargain for America. Oracle and a consortium of US investors would control 80 per cent of a newly created American entity that would run TikTok’s operations in the US. All US user data would remain on Oracle’s servers in Texas, and the new company would license TikTok’s prized recommendation algorithms and retrain them on American data. Six of the entity’s seven board seats will be held by Americans.

In other words, Americans’ data and TikTok’s servers and algorithms would all appear to be firmly under US control. The deal even carries financial rewards for the Trump administration in the form of a multibillion-dollar payment from investors, effectively a fee for brokering the settlement with the Chinese.

Look more closely, however, and the picture is less reassuring. After all, global investors already own roughly 60 per cent of ByteDance, TikTok’s parent company, while the company’s founders own another 20 per cent and its employees the remaining 20 per cent. The deal merely raises US ownership of the American operation to 80 per cent, leaving ByteDance with just under 20 per cent but still being the single largest shareholder.

More tellingly, the intellectual property behind TikTok’s algorithms remains firmly in ByteDance’s hands. Far from acquiring the recommendation engine outright, Oracle and other US investors are only receiving a licensed copy.