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A deal in the works between the U.S. and China over the ownership of TikTok could include a licensing agreement for the closely guarded secret of the social media company’s algorithm, to which access has proved a major sticking point in negotiations between the countries.
The Chinese government once vowed to block the sale of TikTok’s algorithm, the technology that seems to intuit user preferences almost instantaneously and that has been a driving force for the video-sharing app’s explosive growth in recent years.
Previously, TikTok had also seemed unwilling to budge. In May, when the platform was challenging a 2024 law banning TikTok in the U.S., the company said in a legal filing that “divesting TikTok Inc.’s U.S. business and completely severing it from the globally integrated platform of which it is a part is not commercially, technologically, or legally feasible.”
President Trump this week again pushed back enforcement of the TikTok law, which would require its parent company, Beijing-based ByteDance, to sell its stake in the app or be cut off from the U.S. market. In the meantime, an agreement between the U.S. and China appears to be moving forward. Mr. Trump on Friday said he and Chinese President Xi Jinping have “made progress” in talks over a potential deal to resolve the dispute over TikTok’s ownership.
Although key elements of the framework deal remain unclear, when some details were released earlier this week, Wang Jingtao, deputy director of China’s Central Cyberspace Affairs Commission, told reporters in Madrid that the arrangement included agreement over “the use of intellectual property rights,” according the Associated Press.
William Akoto, an assistant professor at American University, thinks ByteDance executives may be urging the Chinese government to strike a deal so the company can continue earning revenue from the algorithm, while maintaining a foothold in the U.S.
ByteDance and TikTok did not respond to requests for comment.
How would a TikTok licensing deal work?
Mr. Trump, asked Thursday about what will happen with TikTok’s algorithm, said, “TikTok has tremendous value. The United States has that value in its hand since we’re the ones that have to approve it.”
Chinese law prohibits the export of TikTok’s proprietary algorithm, including to the U.S., without government approval, according to experts. So exactly how a licensing deal would work remains unclear, including whether ByteDance could maintain any sort of outside control over TikTok’s algorithm once ownership transfers to U.S. owners.
“What I understand is they would give a U.S. entity legal permission to use it under certain terms,” said Sarah Kreps, a nonresident senior fellow at the Brookings Institute, a nonpartisan policy research organization. “So it would be like they’re renting the algorithm rather than selling it.”
Kreps added that in retaining a measure of ownership over the algorithm, ByteDance could have the right to access internal TikTok metrics and influence how content is ranked in the U.S., akin to how a software vendor can patch or upgrade licensed software.
The Wall Street Journal, citing people familiar with the matter, said this week that TikTok would create a new U.S. app and that the company’s engineers would re-create content-recommendation algorithms using technology licensed from ByteDance.
A White House spokesperson declined to comment on the contours of the U.S.-China framework deal over TikTok. “Any details of the TikTok framework are pure speculation unless they are announced by this administration,” the spokesperson said.
What makes TikTok’s algorithm special?
Algorithms are complex data systems that act as recommendation engines, ranking the content users ultimately see in their feeds. They also help companies gather information about their customers in order to serve them targeted advertisements, a key source of revenue.
Like other social media players, TikTok’s algorithm delivers content to users based on their interests and interactions on the platform. Lauryn Williams, a deputy director and senior fellow focused on technology at the Center for Strategic and International Studies, described the algorithm as TikTok’s “secret sauce.”
Kreps highlights the algorithm’s ability to quickly pick up on user behavior, interests and preferences. “There’s something about it that is so well-tailored to what they understand people to want that it gets them on the platform and keeps them there in ways that don’t seem to be the case with other platforms,” she said.
In its own explanation of how it recommends videos, TikTok says it considers a range of factors, such as how long someone stays on a video and personal user information, such as someone’s language preference or country of origin. The algorithm then “selects from a large collection of eligible content and ranks them based on the system’s prediction of how likely you’ll be interested in each one.”
A Supreme Court ruling from January upholding the TikTok ban notes that each interaction a user has on TikTok — whether watching a video, following an account or leaving a comment — enables the recommendation system to “further tailor a personalized content feed.”
National security concerns
In Madrid, U.S. Trade Representative Jamieson Greer said on Monday that “we want to ensure that the Chinese have a fair, invested environment in the United States, but always that U.S. national security comes first,” according to CNN.
But while a deal between the U.S. and China could address the ownership dispute, it might not resolve all of the national security concerns that led Congress to pass the TikTok ban with bipartisan support in April of 2024, experts told CBS MoneyWatch.
The Justice Department last year accused TikTok of collecting sensitive data about U.S. users, warning that the Chinese government could use the information to manipulate the content that people see. It also said TikTok employees were able to communicate directly with ByteDance engineers in China via an internal messaging system called Lark.
In 2022, TikTok acknowledged in a letter to U.S. senators that China-based employees could have access to American users’ data in certain circumstances and said it was taking steps to strengthen data security.
In its decision to uphold the TikTok ban in January, the Supreme Court also noted that China can require TikTok’s parent company “to cooperate with [its] efforts to obtain personal data,” and that “there is little to stop all that information from ending up in the hands of a designated foreign adversary.”
To minimize any national security concerns, Akoto, the American University assistant professor, said the new arrangement would have to ensure that the app’s China-based engineers are unable to access the U.S. version of Tiktok. If the algorithm sends user data back to China or if the algorithm can be updated outside of the U.S, that could leave American users’ data vulnerable, he said.
When Jingtao, the deputy director of China’s Central Cyberspace Affairs Commission, spoke to the press earlier this week, he indicated the U.S. and China have agreed on entrusting a partner with handling U.S. user data and content security, although its unclear how exactly that would work.
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