- Beijing confirmed TikTok’s U.S. spin-off will license ByteDance’s algorithm under new deal terms.
- U.S. investors would control the app but operate with “Chinese characteristics.”
- The licensing arrangement complicates compliance with U.S. divest-or-ban law.
- China frames the deal as exporting technology, reinforcing sovereignty over AI.
- TikTok’s continued U.S. presence hinges on balancing political, legal, and security concerns.
Beijing says the U.S. spin-off will operate under a licensing deal, keeping ByteDance’s core technology in play.
After months of tense talks and looming deadlines, China has confirmed that the U.S. version of TikTok — set to be spun off into a separate entity controlled by American investors — will continue to use its Chinese-developed algorithm under a licensing arrangement. The announcement followed high-stakes negotiations in Madrid, where U.S. and Chinese officials attempted to resolve disputes over tariffs, technology access, and the future of the popular app.
The algorithm at the heart of TikTok has long been a flashpoint in the geopolitical struggle between Washington and Beijing. U.S. lawmakers and regulators argue that continued Chinese control poses national security risks, while China sees the algorithm as a valuable export — one it is unwilling to surrender outright.
Beijing’s Bottom Line: Licensing, Not Surrender
Wang Jingtao, deputy head of China’s powerful cyber security regulator, said the framework agreement included “licensing the algorithm and other intellectual property rights.” This represents a compromise that allows TikTok’s U.S. operations to remain online while enabling China to claim it is exporting advanced technology rather than relinquishing it.
An Asia-based ByteDance investor echoed this view, saying:
“Beijing’s bottom line is a licensing deal. Beijing wants to be seen as exporting Chinese technology to the U.S. and the world.”
According to reports, ByteDance will entrust U.S. investors with operational control over American user data and content security, but the app’s functionality will continue to be powered by the algorithm developed in Beijing.
Washington’s Position: U.S. Control With “Chinese Characteristics”
U.S. Treasury Secretary Scott Bessent confirmed the outline of the deal, noting that the spun-off company would be majority-owned by American investors but would preserve some “Chinese characteristics.” This phrasing underscores the compromise: operational oversight in the U.S. balanced with a reliance on ByteDance’s proprietary technology.
The details remain fluid, but the agreement appears designed to satisfy the congressional mandate that TikTok separate itself from Beijing while avoiding a complete shutdown of the app. The law grants the U.S. president authority to decide whether divestment is sufficient, giving President Trump leeway to approve this arrangement despite its licensing component.
The Stakes for ByteDance and Global Tech
For ByteDance, securing a licensing arrangement ensures it maintains influence over the U.S. TikTok entity while reinforcing its position as a global technology exporter. For China, the decision avoids setting a precedent for forced sales of other domestic companies abroad.
From Washington’s perspective, the deal reduces direct Chinese control over U.S. user data but stops short of a clean break. Analysts caution this halfway solution may spark criticism from lawmakers who wanted complete independence from Chinese technology.
What Comes Next
Although the Madrid talks produced a framework, the final terms must still be confirmed. President Trump has the authority to extend or finalize the deadline for TikTok’s divestiture, and observers expect another round of negotiations over how the licensing arrangement will be structured.
The deal also raises broader questions: Will U.S. regulators accept a Chinese algorithm powering one of the country’s most influential social platforms, even under U.S. investor control? And could this model — licensing rather than full divestiture — become a template for other tech disputes between Washington and Beijing?
For now, the compromise keeps TikTok alive in its largest foreign market while highlighting the uneasy balance of global tech governance in an era defined by competition over data, algorithms, and influence.
