U.S., China in deal for TikTok to keep operating in U.S.

The icon for the video sharing TikTok app is seen on a smartphone, Tuesday, Feb. 28, 2023, in Marple Township, Pa. (AP Photo/Matt Slocum, File)

WASHINGTON - U.S. President Donald Trump on Tuesday announced an agreement between the U.S. and China to keep TikTok operating in the United States, with three sources familiar with the matter saying the deal was similar to one discussed earlier this year.

The agreement requires TikTok’s American assets to be transferred to U.S. owners from China’s ByteDance, potentially resolving a saga that has lingered for nearly a year.

A deal for the popular social media app, which counts 170 million U.S. users, would represent a breakthrough in months-long talks between the two biggest economies as they seek to defuse a wide-ranging trade war that has unnerved global markets.

“We have a deal on TikTok ... We have a group of very big companies that want to buy it,” Trump said at a White House briefing, without providing further details. The announcement comes a day before a Sept. 17 deadline to sell or shut down the short video app.

Later in the day the White House extended that deadline until December 16. The White House declined to provide any further details on the agreement with China.

The delay will give ByteDance another 90 days to finalize an agreement to transfer TikTok’s American assets to U.S. owners, suggesting much work needs to be done to close the complex transaction.

The U.S. entity will have an American-dominated board, the Wall Street Journal reported, with one member designated by the U.S. government.

The idea takes a page from a recent national security agreement inked by the Trump administration that allowed Nippon Steel to buy U.S. Steel after allowing the U.S. to name a board member, in addition to having a Golden Share.

Any agreement may require approval by the Republican-controlled Congress, which passed a law in 2024 during the Biden Administration that required TikTok’s divestiture due to fears that its U.S. user data could be accessed by the Chinese government, allowing Beijing to spy on Americans or conduct influence operations through the app.

The basics of the new deal, also similar to April, include that ByteDance will keep the single largest ownership stake at 19.9 per cent, just under the law’s 20 per cent threshold, two of the sources said.

While the broad terms are expected to remain the same, the sources did say they do not know what the final deal would exactly look like, given the potential for last-minute changes.

U.S. Treasury Secretary Scott Bessent told CNBC on Tuesday the commercial terms of the deal had, in essence, been done since around March with just a few details left to be ironed out.

“This deal wouldn’t be done without proper safeguards for U.S. national security,” Bessent said. “It seems as though we were also able to meet the Chinese interest.”

CNBC reported Tuesday that the deal is expected to be closed within the next 30 to 45 days, and that the agreement will include existing investors in TikTok’s China-based parent, ByteDance, and new investors.

The details are in line with Reuters’ reporting in April that the deal would spin off TikTok’s U.S. operations into a new company based in the U.S. and majority-owned and operated by U.S. investors.

Jeff Yass’ Susquehanna International Group, General Atlantic, Kohlberg Kravis Roberts and Sequoia Capital are among ByteDance’s U.S. backers.

The Trump administration has declined to enforce the law due to worries it would anger TikTok’s huge user base and disrupt political communications, instead extending the divestiture deadline on three separate occasions.

Trump, who has credited TikTok with helping him win re-election last year and has 15 million followers on his personal account, was expected to extend the deadline for the fourth time. The White House also launched an official TikTok account last month.

Tariffs and TikTok

A deal for TikTok, which had been in the works in the spring, was put on hold after China indicated it would not approve it following Trump’s announcements of tariffs on Chinese goods.

Washington has said that TikTok’s ownership by ByteDance makes it beholden to the Chinese government.

But the company has said U.S. officials have misstated its ties to China, arguing its content recommendation engine and user data are stored in the U.S. on cloud servers operated by Oracle, while content moderation decisions that affect American users are also made in the U.S.

CNBC reported on Tuesday that Oracle will keep its cloud deal with TikTok. Reuters reported earlier this year that the White House was working on a plan to tap Oracle, along with a group of outside investors, to control the app’s operations.

As part of the plan, Oracle would have been responsible for addressing national security issues, Reuters had reported.

Oracle shares pared some gains on Tuesday following the news and were last up one per cent.

A framework agreement was reached by officials from both countries on Monday. A final confirmation on the deal is expected on Friday in a call between Trump and Chinese President Xi Jinping.

Trump said in March that his administration was in touch with four different groups on TikTok’s sale. Microsoft, Amazon, billionaire Frank McCourt and a consortium led by the founder of OnlyFans have been among the bidders, according to reports.

(Reporting By Andrea Shalal and Jarrett Renshaw, Deborah Sophia, Jaspreet Singh; Editing by Anil D’Silva)