What to know about the deal to keep TikTok in U.S.

Matt Hatfield, executive director at OpenMedia, joins BNN Bloomberg to discuss what TikTok's pause means for Canada-China trade.

NEW YORK — TikTok has at last finalized a deal to keep the popular video sharing platform operating in the U.S. after years of uncertainty, but questions remain about whether users’ experience will change and whether the changes actually address security concerns around the app.

Here’s what to know about the deal, which created a new TikTok U.S. joint venture after social video platform company signed agreements with major investors including Oracle, Silver Lake and the Emirati investment firm MGX.

Why was the deal needed?

After wide bipartisan majorities in Congress passed — and President Joe Biden signed — a law that would ban TikTok in the U.S. if it did not find a new owner in the place of China’s ByteDance, the platform was set to go dark on the law’s January 2025 deadline. For several hours, it did. But on his first day in office, President Donald Trump signed an executive order to keep it running while his administration sought an agreement for the sale of the company. A string of orders continued to extend the deadline until this deal was reached.

We don’t know how the TikTok experience will change, but there’s no new app

American TikTok users can continue using the same app, according to TikTok. But exactly what American users will see on their TikTok feeds once the changeover happens remains unclear.

The algorithm — the secret sauce that powers its addictive video feed — powering the U.S. backend will be licensed from ByteDance and then retrained on U.S. user data and updated. The act of retraining the content recommendation formula is certain to at least have subtle changes to a user’s personalized feeds.

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Any noticeable changes made to a social media platform’s service raises the risk of alienating its audience, said Jasmine Enberg, an analyst for the research firm eMarketer.

TikTok’s press release claims U.S. creators will still be discoverable in other regions worldwide, and businesses will be able to maintain global reach. But how interoperability between the U.S. and ByteDance to maintain a global TikTok experience is currently unknown.

The retrained algorithm means that the trends — “and what dominates feeds — will feel distinctly American,” said Forrester analyst Kelsey Chickering.

“Global content will still appear, but its ranking will change,” she said. “This matters because the algorithm is the heartbeat of the app’s addictive experience. The question becomes: Will a U.S.-centric feed supercharge engagement, or will it chip away at TikTok’s cultural cachet?”

What is known, however, is that there is an updated Terms of Service.

One of the updates notes that while users retain ownership of their content, TikTok is able to use that content to operate or improve the platform, subject to settings.

Americans under the age of 13 will be limited to an “Under 13 Experience.”

And users are also responsible for any posted AI-generated content and must label it as created by artificial intelligence.

TikTok’s new owners have ties to Trump

Although he no longer runs Oracle as its CEO, company co-founder Larry Ellison remains a top executive while also overseeing an estimated personal fortune of US$390 billion. Ellison, 81, now could be in line to become a behind-the-scenes power player in the media, having already helped finance Skydance’s recently completed US$8 billion merger with Paramount, a deal engineered by his son, David. Ellison’s relationship with the Trump administration dates back to the president’s first term, where he played a role in the administration’s efforts to get ByteDance to sell TikTok.

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These ties have raised concerns among some users around content moderation and what videos American users will see on their feeds.

“If moderation happens to tilt toward one political viewpoint or fails to curb misinformation, TikTok risks a user exodus to rival platforms,” Chickering said. “We’ve seen this before when Twitter’s transformation into X triggered fallout from users and advertisers.”

The deal does not completely address security concerns in the law

Lawmakers previously expressed concern that the Chinese government could use TikTok’s algorithm to push propaganda or gather data on individual users, a key reason Congress passed legislation in 2024 requiring the company’s divestment from Beijing-based owner ByteDance.

The law prohibits “any cooperation with respect to the operation of a content recommendation algorithm” between ByteDance and a new potential American ownership group, so it is unclear how ByteDance’s continued involvement in this arrangement — especially since they will license the algorithm to the U.S. entity — will play out.

How are users and creators reacting?

Skip Chapman, co-owner of KAFX Body in Manasquan, New Jersey, which makes and sells natural deodorants, launched his business in April 2023 on TikTok when TikTok shop was still in beta testing. He said he’s mainly glad he can stop worrying about the potential of a TikTok ban, the threat of which has been looming over his business for over a year. He sells his products on his own website and Amazon, but 80 per cent of sales still come from the TikTok shop and it is the primary way he reaches new customers.

He said he is cautiously optimistic the deal will be good for TikTok and his shop, but he is a little concerned that the new owners might de-prioritize the e-commerce aspect of TikTok.

“The past two years, TikTok has really leaned into this live social commerce and just the ability to sell on the platform and they’ve kind of prioritized it and I’m hoping that the new owners continue to prioritize it and even more so add more features, more benefits, more opportunities for my business,” he said. “Under new ownership, they could deprioritize it and focus more on creators doing other things or influencers that are doing maybe paid brand deals, and that would have less of a positive effect on us.”

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Vanessa Barreat owns La Vecindad Mexican restaurant in Las Vegas, and she has TikTok page for the restaurant that has over 100,000 followers. Visibility on the site has helped her attract customers, particularly out-of-towners, and spend less on marketing.

She said she’s in a “wait-and-see mindset” about the deal.

“Anytime there’s a major shift or deal, there’s uncertainty, but I’m not operating from fear,” she said. “TikTok has empowered so many voices that historically didn’t have access to platforms like this, and that impact doesn’t disappear overnight.”