The TikTok deal won’t cut off China’s algorithm, but it could allow a lot of people to get a big payout
The first thing to be understood about the Tiktok deal is that it is not actually a deal – at least not in any formal capacity yet. Trump’s executive order on Thursday simply decreases the application of Chinese social media from its ban in the United States (as required by a law approved in the spring of 2024) for another 120 days, while the various parties seek to finalize the agreement.
So there is a lot that we do not know about the agreement, and there is a lot that can change.
But if you listen closely to everything that was said during the Trump signing ceremony, and if you collect the official White House statements in addition to various press reports on the deal, there are two things that are clear:
- The algorithm, which was built in China, will continue at the heart of the American national security concerns to serve the content of the Americans, albeit a kind of censorship and “re -training”.
- The deal creates an opportunity for many people concerned to make money.
Whether it makes the deal good or a bad deal that may depend on your views on everything from political geography to financial practices in Wall Street, but if there is nothing else, this is an extraordinary deal that is completely different from what many expect.
Made in the United States?
Let’s start with the American version of the Tiktok app that will be born as a result of the deal.
According to the White House, a portion of the Tiktok service that is currently serving the population of the Chinese parent company will be eliminated. The new American Tiktok will be created and modified, under the control of a joint venture “owned by the majority and control of it by American people.
All user data for this application will be stored in Oracle’s American data centers (a practice that has already begun in 2022 in response to US concerns), thus ensuring the privacy and security of Americans data.
The joint project will also be responsible for overseeing the algorithm that chooses videos that appear in user extracts. But it seems as if actual It will remain the algorithm that operates the American Tijook that has been developed by Bytedance – the algorithm that lawmakers who said could not be trusted due to the Byteedance relations with China, which is “a foreign opponent”.
In the official “facts” of the executive order, the White House said, “The disposal of the algorithm, the symbol and the moderate content under the control of the new joint project.” The request calls for “all recommendations forms, including algorithms, which use American user data to re -train and monitor them by trusted security partners in America.”
What does not say explicitly is that the American Tiktok will create its own new algorithm from the zero point.
The idea seems to be that any danger by China -made algorithm that can be eliminated by placing an American candidate over it. How this will work in practice still should be seen. Will the United States get full access and vision to the algorithm, or will it essentially try to overcome a black box? And can the American filter be so strong that it kills magic, which leads to the gentle American Tiktok and cheating so that no teenager who really respects the self already use it?
A license deal and a lot of upward trend
According to the Bloomberg report, it refers to anonymous sources, JV will license the algorithm from Bytedance, and pay the company by 20 % of revenues and up to 50 % of the profits. Somehow, it is an elegant solution to a difficult problem: by possessing the algorithm and the property rights share by 20 % in one of the assets that bear its brand in the United States, and gets a constant financial incentive in the project – all of this gives the endeavor of the friendly air from cooperation instead of accreditation.
Continuous licensing fees also means that American investors can get the original with a very low payment. Vice president JD Vance said on Thursday that the deal worth 14 billion dollars – the league championships without many analysts, which raised the value somewhere between 35 billion dollars and 50 billion dollars. The only way the price will be logical for bytedance is the licensing fee that sends high -rating future revenues on its way.
Axios reported that Silver Lake, Oracle and MGX (Abu Dhabi -based box) will have a 45 % share in the new joint project, while a 5 % segment is reserved for a new group of investors “still in a state of flow”. The 5 % group Robert Murdoch and Michael del may include names that Trump cited during a signing ceremony on Thursday. One can imagine many other friends in the Trump administration who are eager to accept it in a 5 % club, given the low admission price.
Now, let’s imagine that in the post -completion of the deal, the new owners of America decided to float the shares to the public in public subscription. With the exception of some unexpected disasters, the offer will surely appreciate the American Tiktok at a level of more than $ 14 billion (for comparison, SNAP has a $ 14 billion roof of the market even though the US SNAP user base is much smaller. Whether investors sell in public subscription, or after sharing shares, there is a lot of possible ascension.
The deal may open up to the long -awaited public subscription dreams. The company plans to entertain the shares in Hong Kong in 2021 amid issues with Chinese organizers on data security, and uncertainty about the fate of Tijook in the United States has placed dissatisfied on any list in the public market since then. Free headache of the United States, Bytedance will have a more attractive issue for providing public markets – including a gentle license income.
There are many potential winners in this deal. Whether the American public is one of them still should be seen.
2025-09-26 22:58:00
