The US-China rivalry has seen Washington and Beijing crack down on each other’s firms over national security concerns.
Yet in the the most recent trade war TikTok became “low hanging fruit” that China could offer in exchange for other important concessions, like American agricultural products.
The deal allows China to frame the outcome as a win – exporting tech on its own terms while gaining leverage in broader trade negotiations.
ByteDance will retain access to America’s 200 million users and 7.5 million businesses, but it loses control over TikTok’s algorithm and data.
Instead, the company will licence the algorithm to the new US entity, in a deal the Trump administration has valued at $14bn (£10bn).
“TikTok’s power lies in its content graph – an algorithm that learns from thousands of user signals to deliver hyper‑relevant, highly addictive videos,” said Kelsey Chickering, principal analyst at Forrester.
“With a US joint venture retraining that algorithm on domestic data, the experience will change… One thing’s certain: TikTok in America won’t be the same.”
This shift could have knock on effects for advertisers and creators because of the changes.
Creators may see their engagement shrink especially because global virality will take a hit – previously content that took off in one region could become popular in the US organically. A US-only algorithm could weaken that, forcing brands to re-structure deals and perhaps having to pay more for US exposure.
TikTok’s global revenue was estimated to be $20-26bn in 2024, roughly $10 billion of which came from the US with advertising accounting for a large share.
The changes will likely hurt TikTok’s bottom line in the US, but ByteDance retains a 19.9% stake and therefore a share of the profits.
The retraining of the algorithm might also have consequences for ByteDance’s technology development.
Running separate US and global algorithms, split workforces, and parallel governance adds engineering costs, slows innovation, and adds to the operational complexity, says Charlie Dai Principal Analyst in Technology Architecture & Delivery at Forrester.
