China Says TikTok Framework Agreement is a 'Win-Win' Deal

China has hailed the agreement reached with US trade officials on the operations of TikTok in the United States as a “win-win” deal.

The framework agreement achieved in Madrid on Monday will see the US operations of the popular short-video app switch to local owners because of a law passed last year by Congress, which deemed Chinese ownership of TikTok a national security risk and that parent company Bytedance must divest its holding or face a ban.

The deal is expected to see Bytedance and Chinese shareholders’ stake reduced to below 20%, while tech giant Oracle, venture capital firm Andreessen Horowitz, and private equity firm Silver Lake Management look set to be key partners in the 80% of shares that American investors will purchase.

ALSO SEE: US Keen to Control More Ports, Cut China’s ‘Maritime Advantage’

The group could be led by Oracle’s executive chairman Larry Ellison – who was briefly the world’s richest person last week, when his personal fortune topped $390 billion. Ellison, 81, is a Trump supporter and was one of the investors favoured by the President to purchase the app’s US operations early this year.

Details of the price, which could be $40 billion or so, and other aspects of the deal are still vague as investors must wait for a call scheduled on Friday between US President Donald Trump and Chinese leader Xi Jinping, which is expected to confirm the deal.

Sources familiar with the framework told CNN the deal would involve investments from a number of US-based venture capital firms, private equity funds and tech companies, and that they would create a US-based company that will operate the app.

New executive order

Trump signed a fourth executive order on Tuesday that will give a further three months, until December 16, for Chinese and US officials to complete the deal.

A US-majority board will oversee the new company’s operations and have a member appointed by the Trump administration, CNN said.

Once that structure is set up, the app’s new and old users will migrate to a new platform, which US engineers have reportedly already been testing.

Bytedance is expected to license its recommendation algorithms to the US company, although the details of how that will work – and whether the outcome eases US concerns about China conducting ‘influence operations’ via the app, is likely to be an issue that will be closely watched.

Wang Jingtao, a deputy director of China’s Cyberspace Administration, said the deal could include methods such as the entrusted operation of TikTok’s US user data and the licensing of algorithms and intellectual property rights, Chinese state media reported.

Some analysts have said TikTok’s famous algorithm is not so special, as it has reportedly been easy to replicate, and that the Chinese app’s impetus came more from its early-mover advantage and network effects.

Oracle to continue cloud services

Oracle, which is based in Austin, Texas, already hosts TikTok user data in the US and is expected to continue providing cloud services for the new company.

Progress over the popular social media app – which claims to have 170 million US users – is seen as key to facilitating further talks in the coming months as the world’s two largest economies chart a path beyond their current tariff truce.

Reuters has reported that the deal, and the transfer of TikTok’s US assets to US owners from Bytedance, is similar to an agreement worked out earlier this year, but was shelved after Trump announced steep tariffs on Chinese goods.

“China reached the relevant consensus with the United States on the TikTok issue because it is based on the principles of mutual respect, peaceful co-existence and win-win cooperation,” the official People’s Daily said in a commentary.

The article was signed “Zhong Sheng” or “Voice of China”, a term the paper of the governing Communist Party uses to express views on foreign policy.

“China will review matters related to TikTok’s technology exports and intellectual property licensing in accordance with the law,” the commentary added.