U.S. Entity to Govern TikTok Content, License Core Algorithm in Proposed Deal

Washington D.C. – A new framework deal between the United States and China is poised to reshape TikTok's operations for its 170 million U.S. users, granting a U.S.-based entity significant control over content moderation and the platform's proprietary algorithm. This development aims to address long-standing national security concerns regarding the popular social media app, owned by Beijing-based ByteDance. The agreement, confirmed by Treasury Secretary Scott Bessent following trade talks, is expected to finalize pending discussions between President Donald Trump and Chinese Premier Xi Jinping.

A key component of the proposed structure involves licensing TikTok's core algorithm to the U.S. entity. This algorithm is widely considered the "secret sauce" behind TikTok's success, driving its highly personalized "For You Page" content recommendations. As Jonathan Tien commented on social media, > "this deal structure should allow for that—you get to license the algo, which is core to what makes TikTok a great product."

Crucially, the U.S. entity will gain the authority to establish its own content moderation policies, thereby governing what content is permissible on the platform in the United States. > "The U.S. entity gets to set its own content moderation policies and thereby govern what is even allowed on TikTok in the first place," Tien added. This move seeks to prevent potential foreign influence over information presented to American users, a primary concern for U.S. lawmakers.

This framework builds upon TikTok's previous initiative, "Project Texas," a $1.5 billion effort designed to isolate U.S. user data and operations within the country, often in partnership with Oracle. While Project Texas aimed to mitigate risks by storing U.S. data on American soil and implementing independent oversight, it faced skepticism from some lawmakers who deemed it insufficient to fully address national security threats.

Reports indicate that a consortium of American investors, potentially including Oracle, Silver Lake, and Andreessen Horowitz, would acquire a majority stake in the new U.S. TikTok entity, with ByteDance retaining a minority share. The deal represents a compromise, as China had previously resisted divesting the algorithm, considering it restricted intellectual property. The extended deadline for a potential U.S. ban on TikTok is now December 16, 2025, providing a window for the finalization of this complex agreement.