China will sell TikTok and keep the algorithms, but it is not certain
Negotiations between the US and Chinese sides on the nationalisation of TikTok in the US are extremely tense. Today, on 17 September, the next "final" date for postponing the ban on TikTok expires, and another postponement is already becoming a national tradition. Negotiations between US and Chinese politicians are heavily influenced by each escalation of the US-China trade war. It seems that there is progress, but it is not visible.
In order to show at least some results of their work before the next deadline, the Americans said that yesterday's round of talks in Madrid ended with a framework agreement on a compromise. ByteDance is said to be selling the US part of TikTok to a group of US investors, including such giants as Oracle, Andreessen Horowitz, Silver Lake, Susquehanna International and General Atlantic. The deal provides for the creation of a new company with an American majority in the board of directors, which will manage TikTok in the United States. ByteDance, however, will retain about 19.9% of the shares, a symbolic but strategically important stake.
The most interesting and controversial aspect of this deal is the recommendation algorithm, the heart of TikTok, what makes it so engaging and personalised. The Chinese side will not transfer it to the US, but will only grant a licence to use it. This means that the US version of TikTok will be able to use the algorithm, but will not have full control over its development or modification. This approach allows China to maintain its technological superiority and control over the platform, while relieving some of the political pressure.
No details of the deal are currently available. It is likely that the content created in the US version of TikTok will be available to users from all over the world. Most likely, content from all over the world will also be available to Americans, but this will mean that the American company is just a regional representative office of BytaDance that can moderate content and sell advertising. How interesting this is to potential investors remains a mystery.
The Chinese side's statement is even more interesting, as it differs from the Americans'. While the Americans proudly talk about the achievements of "Peace for our time"., the Chinese representative Li Chenggang said that this is blackmail, not negotiations. According to the Chinese side, Chinese companies are being persecuted for political reasons. The communists probably believe that factories should belong to workers and land to peasants, but TikTok should not belong to creators, which is different. Indeed, the difference is tangible - they took the land and factories for themselves, and TikTok is being taken from them.
It doesn't look like the parties will reach a quick agreement - recently, the Americans have been putting pressure on China to reduce its imports of Russian oil. But China is not even thinking of stopping - it is economically and politically beneficial for them. In the end, Trump simply has no good cards. No one believes that he will block TikTok in the US today. A loud statement in Madrid is only needed to once again postpone the blocking for 90 days to save face.
Source: www.reuters.com
