US and China Finalize TikTok Deal, Formalization Expected This Week

Agreement Reached on TikTok's US Operations

The United States and China have reportedly finalized an agreement concerning the sale of TikTok's US operations, a significant development confirmed by US Treasury Secretary Scott Bessent. The announcement was made on Sunday, October 26, with Bessent stating that 'all the details are ironed out' following a framework deal reached in Madrid. The finalization paves the way for Presidents Donald Trump and Xi Jinping to formally 'consummate that transaction' during a meeting scheduled for Thursday, October 30, in Korea, likely on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit.

Deal Structure and Valuation

The agreement is estimated to be valued at $14 billion and addresses long-standing national security concerns raised by the US government regarding the Chinese ownership of the popular video-sharing application. Under the terms of the deal, US and international investors are expected to acquire approximately 65% of the company, while ByteDance, TikTok's Chinese parent company, and other Chinese investors will retain less than a 20% stake.

Key aspects of the new ownership structure include:

• Majority US ownership: American and international investors will hold the controlling interest.
• Algorithm control: Oversight of TikTok's recommendation algorithm will be transferred to the new investors, with Oracle reportedly tasked with retraining a US-specific version.
• Board of Directors: The new US investors will control six out of seven seats on the board of directors.

Prominent US investors reportedly involved in the acquisition include Rupert Murdoch, Larry Ellison's Oracle, FoxCorp, Andreessen Horowitz, and Silver Lake Management.

Context and Broader Implications

Treasury Secretary Bessent clarified that his role in the negotiations was to secure China's approval for the transaction, stating, 'My remit was to get the Chinese to agree to approve the transaction, and I believe we successfully accomplished that over the past two days.' The deal is also understood to be part of a broader framework for a potential trade agreement between the United States and China.

This resolution follows an executive order signed by President Trump on September 25, which facilitated a path for new US-based ownership. The agreement comes after years of tension, including a threat by Trump to ban TikTok in 2020 and a bipartisan law passed by Congress in April 2024, signed by then-President Joe Biden, which mandated divestiture or a ban. The effective date of this ban, initially set for January 20, 2025, had been extended multiple times by the Trump administration to allow for a deal to be reached.