US, China Reach Major Framework Deal For TikTok Ownership

The United States and China are working to finalize a major deal that would give 80% of the app's ownership to various American companies, allowing it to stay active in the US.

Last year, the Biden administration passed a law requiring ByteDance, TikTok's parent company, to sell the company, and refusing to do so would result in a ban. The American government feared that the Chinese government could have been using ByteDance, TikTok's parent company, to manipulate the American population, spy on them, or steal sensitive data. In January, once that deadline expired, TikTok was officially banned by the United States after the Supreme Court denied their appeal against the law.

Millions of online businesses use TikTok for advertising and over 170 million Americans are monthly users of the app, making the ban a significant shift for many citizens. However, once current President Donald Trump came into office, he extended the deadline, allowing TikTok to stay active in the US.

Over the last few months, Trump has continued extending the deadline, hoping for a plan to materialize, but the US-China trade war earlier this year hindered those efforts. Nevertheless, after weeks of negotiations in Madrid, both countries have confirmed that they reached a framework deal that allows the app to stay active in the US.

The deal grants around 80% of TikTok's ownership to various American corporations, including software and cloud computing giant Oracle, global private equity firm Silver Lake, and venture capital firm Andreessen Horowitz, along with several existing foreign shareholders. These corporations will maintain a stake in a new, US-based parent company which will take over as TikTok's largest shareholder.

Trump previously stated that he would attempt to split the ownership equally between US and Chinese companies, but the Biden administration's bill prevents China from owning more than 20% of TikTok. Due to this, ByteDance will only retain ownership of 19.9% of the app, falling just below that 20% threshold.

The deal is a huge success for social media users and for the American government– less than one year ago, ByteDance stated that they would never sell their app, and the Chinese government was also strongly against the idea. Additionally, Trump's extensive tariffs damaged the two countries' relationship even further, but talks continued after the trade war came to an end. Now, it appears that TikTok will live on under a new ownership, and ByteDance will still retain a minority stake in the company.

However, while they have reached an agreement, the deal has not been completely finalized and could still change before it becomes official. The deadline for the TikTok ban has been extended until December 16, meaning that the deal will likely be approved prior to the expiration date.

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