TikTok Algorithm to Be Licensed; U.S. Gov Says “Won’t Have A Stake”

In a deal aimed at resolving national security concerns, ByteDance, the Chinese parent company of TikTok, has agreed to license its powerful recommendation algorithm to a new U.S.-based joint venture. The new entity will be led by tech giant Oracle and private equity firm Silver Lake, effectively separating TikTok’s U.S. operations from Chinese control.

The agreement, announced in late September 2025, represents a significant concession from ByteDance, which had previously resisted demands to sell its proprietary algorithm. Instead of an outright sale, a U.S. joint venture of Oracle and Silver Lake (possibly this week) will receive a copy of the algorithm, inspect and retrain it on U.S. user data, and operate it domestically. President Donald Trump said on Sunday that tech and media leaders Michael Dell and Lachlan and Rupert Murdoch may also be part of the new TikTok ownership group.

TikTok Agreement Key Terms

The framework of the deal outlines several measures designed to address U.S. lawmakers’ fears about foreign influence and data security:

• Data Security: All U.S. user data will be stored on Oracle’s servers within the United States, with Oracle responsible for monitoring and securing the data to prevent access by foreign entities.
• Oversight and Control: The U.S. joint venture will be led by a majority-American board of directors. While ByteDance may retain a minority ownership stake of 20% or less, it will have no control over the U.S. entity’s operations.
• Security Committee: ByteDance’s board representative will be excluded from the new security committee, which will oversee the algorithm and data handling.
• Regulatory Approval: The deal is subject to approval from both U.S. and Chinese regulators.

Implications and Ongoing Concerns

While the deal appears to satisfy the U.S. government’s demands for a separation of U.S. operations, it has not quieted all critics. Some lawmakers worry that licensing the algorithm rather than fully divesting it still leaves a path for foreign influence. Legal experts suggest that China’s export control laws could allow Beijing to block any future updates to the licensed algorithm.

The separation also raises questions about how the “retrained” algorithm will impact the user experience for TikTok’s 170 million U.S. users. Some analysts speculate that the new, locally-trained algorithm could change content appearance, although users may not notice that much change.

The deal is a potential prototype for how foreign-owned social media platforms might operate under U.S. law, and its success could set a precedent for future regulatory challenges in the tech industry.