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Zhao Ziwen

Sylvie Zhuang

TikTok may have dodged a US ban but unresolved questions about its algorithm could remain a source of tension in the broader US-China relationship, according to analysts.
ByteDance, the parent company of the social media site, signed a binding agreement this week to divest its US entity into a joint venture controlled by a consortium of American investors, ending years of legal and political uncertainties.
TikTok CEO Shou Zi Chew said in an internal memo on Thursday that the deal effectively averted a looming nationwide ban and secured the platform’s future for its 170 million American users.
The new entity, named TikTok USDS Joint Venture LLC, will come into effect on January 22.
“The US joint venture will be responsible for US data protection, algorithm security, content moderation and software assurance,” Chew said.
“It will also have the exclusive right and authority to provide assurances that content, software and data for American users is secure.”


TikTok has been a thorn in US-China relations since the first Donald Trump administration but the tensions escalated last year when the US Congress approved a nationwide ban on the social media platform unless ByteDance sold its controlling stake by January 19, 2025.
Since returning to White House, Trump has extended that deadline five times, most recently to January 23, 2026.
The two countries reached a framework agreement for the sale during trade talks in Madrid in September.
Wu Xinbo, dean of the Institute of International Studies at Fudan University in Shanghai, said the main framework was essentially set after Trump met Chinese President Xi Jinping in Busan, South Korea, in late October.
“After the summit, it was just a matter of implementing the details, such as selecting the US investors,” Wu said.
“What matters more is that the US should honour its commitments to improving the business environment for Chinese enterprises – a matter that Xi also raised with Trump during their conversations. But the progress has been slow.”
China’s foreign ministry did not comment on the agreement on Friday, saying only that China’s position on the TikTok issue had been consistent and clear.
However, ministry spokesman Guo Jiakun said in October that China “respects the will of enterprises and welcomes them to conduct commercial negotiations based on market principles, and reach solutions that comply with Chinese laws and regulations”.


Under the new arrangement, a consortium of American and allied investors, including Oracle, Silver Lake, and Abu Dhabi-based MGX, will hold half of the US entity. Affiliates of existing ByteDance investors will hold 30.1 per cent, while ByteDance will retain 19.9 per cent.
In the memo on Thursday, Chew said the US venture would oversee algorithm security by “retraining the content recommendation algorithm on US user data to ensure the content feed is free from outside manipulation”.
“A trusted security partner will be responsible for auditing and validating compliance with the agreed upon national security terms, and Oracle will be the trusted security partner upon completion of the transaction,” he added.
Sun Chenghao, a fellow at Tsinghua University’s Centre for International Security and Strategy, said the TikTok plan broadly aligned with market expectations, but its implementation remained uncertain as it would inevitably raise questions over control of TikTok’s core algorithm.
The deal departed from the previously anticipated “direct sale” or “full divestment” model, Sun said, adding that the complex approach to splitting the algorithm could face close scrutiny under US compliance requirements.
“[American regulators] will ask whether TikTok’s core capabilities ultimately remain in China; yet any move towards deeper algorithmic separation or transfer could trigger Chinese regulatory approval requirements, heightening political sensitivities and creating a push and pull on both sides,” Sun said.
Gary Ng, a senior economist for Asia-Pacific thematic research at Natixis, said the loopholes could also become a source of renewed friction between Beijing and Washington.
“There are uncertainties about the algorithm’s control and the relationship with the parent company. This factor may still be a point of ongoing conflict between the US and China, especially before the midterm elections,” he said.


Observers also said that TikTok’s soft landing did not suggest a resolution to the wide range of economic disputes between the countries.
Sun said the deal just marked a single case of “manageable competition”.
“It does carry some positive implications. Even in a low-trust environment, the two sides can still use institutional and technological constraints … to ensure risks remain manageable,” he said.
“But that does not mean the effect will naturally spill over into more structural issues such as tariffs, industrial policy or controls on the export of critical technologies.
“These questions are tied to long-term strategic competition and are far more difficult to resolve than the compliance restructuring of a single platform.”
Shi Yinhong, a professor of international relations at Renmin University in Beijing, said the deal also still needed the formal approval of the Chinese government.
“And the approval cannot necessarily be taken for granted after Washington’s terribly big US$11.1 billion arms sales to Taiwan, a sale angrily condemned by Beijing,” Shi said.
The Pentagon announced earlier this week that it had approved the sale of US$11.1 billion in weapons to the self-ruled island, reportedly the biggest agreement of its kind.
Beijing called the decision a grave violation of its sovereignty and a dangerous signal to separatist forces on the island.
Beijing views Taiwan as part of China to be reunited by force if necessary. Most countries, including the US – the island’s biggest international partner – do not recognise Taiwan as an independent state. But Washington is opposed to any attempt to take the island by force and is legally bound to supply it with weapons to defend itself.


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Diplomacy

Compliance questions remain and Beijing’s approval for the spin-off is not guaranteed, observers say


Compliance questions remain and Beijing’s approval for the spin-off is not guaranteed, observers say.


TikTok seals US deal but core algorithm could still rattle ties with China

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Compliance questions remain and Beijing’s approval for the spin-off is not guaranteed, observers say

Compliance questions remain and Beijing’s approval for the spin-off is not guaranteed, observers say