A deal between the U.S. and China over the ownership of TikTok includes new stipulations over who controls the social media company’s algorithm, a closely guarded secret which has proved to be a major sticking point in negotiations between the countries.
The Chinese government once vowed to block the sale of TikTok’s algorithm, the technology that seems to intuit user preferences almost instantaneously and that has been a driving force for the video-sharing app’s explosive growth in recent years.
Previously, TikTok had also seemed unwilling to budge. In May, when the platform was challenging a 2024 law banning TikTok in the U.S., the company said in a legal filing that “divesting TikTok Inc.’s U.S. business and completely severing it from the globally integrated platform of which it is a part is not commercially, technologically, or legally feasible.”
President Trump this week again pushed back enforcement of the TikTok law, which would require its parent company, Beijing-based ByteDance, to sell its stake in the app or be cut off from the U.S. market.
In the meantime, a senior White House official said Monday that the U.S. and China had reached agreement on the basic details of the app’s ownership. The new structure will move TikTok’s U.S. operations under a “joint venture” based in the U.S. that will control the algorithm and oversee security, the official said.
ByteDance and TikTok did not respond to requests for comment.
Who will control the TikTok algorithm?
According to the White House official, the new arrangement will operate and control a copy of the algorithm. Software maker Oracle will “provide sort of top to bottom security” throughout the company, the official said, noting that will involve monitoring the technology as well as managing how American data is stored.
“It’s going to be continuously monitored as it operates to ensure that it’s behaving appropriately, that it’s not being used for any kind of malicious purpose, and that it’s not being unduly influenced,” the White House official said.
Mr. Trump, asked last week about what will happen with TikTok’s algorithm, said, “TikTok has tremendous value. The United States has that value in its hand since we’re the ones that have to approve it.”
Chinese law prohibits the export of TikTok’s proprietary algorithm, including to the U.S., without government approval, according to experts. Last week, Wang Jingtao, deputy director of China’s Central Cyberspace Affairs Commission, last week told reporters in Madrid that the arrangement included agreement over “the use of intellectual property rights,” according the Associated Press.
“So it would be like they’re renting the algorithm rather than selling it,” she said.
What makes TikTok’s algorithm special?
Algorithms are complex data systems that act as recommendation engines, ranking the content users ultimately see in their feeds. They also help companies gather information about their customers in order to serve them targeted advertisements, a key source of revenue.
Like other social media players, TikTok’s algorithm delivers content to users based on their interests and interactions on the platform. Lauryn Williams, a deputy director and senior fellow focused on technology at the Center for Strategic and International Studies, described the algorithm as TikTok’s “secret sauce.”
Kreps highlights the algorithm’s ability to quickly pick up on user behavior, interests and preferences. “There’s something about it that is so well-tailored to what they understand people to want that it gets them on the platform and keeps them there in ways that don’t seem to be the case with other platforms,” she said.
In its own explanation of how it recommends videos, TikTok says it considers a range of factors, such as how long someone stays on a video and personal user information, such as someone’s language preference or country of origin. The algorithm then “selects from a large collection of eligible content and ranks them based on the system’s prediction of how likely you’ll be interested in each one.”
A Supreme Court ruling from January upholding the TikTok ban notes that each interaction a user has on TikTok — whether watching a video, following an account or leaving a comment — enables the recommendation system to “further tailor a personalized content feed.”
National security concerns
In Madrid, U.S. Trade Representative Jamieson Greer said last week that “we want to ensure that the Chinese have a fair, invested environment in the United States, but always that U.S. national security comes first,” according to CNN.
To minimize any national security concerns, William Akoto, an assistant professor at American University, said the new arrangement has to ensure that the app’s China-based engineers are unable to access the U.S. version of Tiktok. If the algorithm sends user data back to China or if the algorithm can be updated outside of the U.S, that could leave American users’ data vulnerable, he said.
The Justice Department last year accused TikTok of collecting sensitive data about U.S. users, warning that the Chinese government could use the information to manipulate the content that people see. It also said TikTok employees were able to communicate directly with ByteDance engineers in China via an internal messaging system called Lark.
In 2022, TikTok acknowledged in a letter to U.S. senators that China-based employees could have access to American users’ data in certain circumstances and said it was taking steps to strengthen data security.
In its decision to uphold the TikTok ban in January, the Supreme Court also noted that China can require TikTok’s parent company “to cooperate with [its] efforts to obtain personal data,” and that “there is little to stop all that information from ending up in the hands of a designated foreign adversary.”
