After years of unsuccessful negotiations, the Chinese parent company of Tiktok, Bytedance, seems to have finally found a white house to be able to convince.
The technological giant seems willing to maintain control over several of the main commercial functions of Tiktok in the United States (EU.), Including its advertising, electronic commerce and recommendations systems, despite an executive order signed by Trump that says that “the application of Tiktok in the United States will be operated by a newly established joint venture based in the United States”. The Chinese firm will also retain approximately 50% of the revenues of the new American Tiktok, through a set of income distribution agreements between the new American entity of Tiktok and its old matrix.
Trump’s executive order declares that the new Tiktok will have no “operational relationship” with Bytedance, despite the reports that show that the agreement will allow Bytedance to continue controlling advertising and electronic commerce, and despite the revenue distribution agreements that will allow Bytedance to remain owner, controlling and benefiting from the algorithm of Tiktok recommendations.
Much of the Trump plan for Tiktok remembers a draft agreement that Bytedance negotiated with the Biden administration in 2022 (and from which Forbes reported exclusively in 2023). In this agreement, the Chinese parent company would also have conserved visibility – and, in some cases, the control – of key functions of the new American entity, including decisions on budgets, sale of assets, debt and bankruptcy. But even in the draft agreement that the Biden administration rejected, Bytedance would have given part of the control over Tiktok’s advertising and electronic commerce divisions in the United States to the new US entity.
Known as Texas Project, the previous proposal of Bytedance focused on the creation of a new American legal entity called Tiktok Us Data Services (USDS). This entity, according to Bytedance, would be physically and technologically separated from the rest of Tiktok and Bytedance, and their data would be isolated from Bytedance in an American data center managed by Oracle. It seems that the sale of the limited Tiktok assets that make up the agreement proposed by Trump could be little more than a sale of Tiktok USDS.
If Bytedance preserves control over American Tiktok advertising, you could use that control to serve PCCH propaganda also to American users of Tiktok.
The Texas project was a central theme of the testimony of the executive director of Tiktok, Shou Zi Chew, before the Committee of Energy and Commerce of the House of Representatives in 2023, but the Biden administration finally did not accept it. Almost a year after Chew’s testimony, a senior administration official Biden told Congress that the proposal “would allow the algorithm, the source code and the development of the Tiktok software to remain in key indicators in China, and that Chinese and Bytedance employees continue to influence Tiktok operations.”
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Trump’s Tiktok agreement seems like a remastered version of the Biden White House
Congress finally agreed. Almost a month after the official’s testimony, he approved a law that demanded the sale or prohibition of Tiktok. The law specifically established that a new post -sales Tiktok could not have any “operational relationship” with Bytedance, a reference to the Texas Project premise and a rejection of it.
The main differences between the Texas project and the sale of Trump could be semantics. Since the approval of the law, the lobbyists of Bytedance and their allies have had more than a year to reformulate the terms of the proposal as a “sale” that could comply with the letter, if not with the intention, of the Congress Law. Present the agreement as a “sale” of Tiktok in the US, instead of a split of a limited set of Tiktok functions in the US, it gives the impression of a more complete agreement than the real contractual terms could merit.
The continuous control of Bytedance about advertising on Tiktok could be especially worrying from the perspective of national security. A Reuters report published on Friday indicated that a division that will continue to be the exclusive property of Bytedonce will control Tiktok’s business operations in the United States, such as electronic commerce and advertising. In 2023, Forbes reported that the Chinese state media had published ads on Tiktok that reached millions of Europeans with PCCH propaganda. If Bytedance maintains control over American Tiktok advertising, you could also use it to spread PCCH propaganda among Tiktok US users.
One of the greatest unknowns on the Trump agreement with Tiktok is whether it will reflect another set of terms of the agreement rejected with Biden: these would grant the US government an unprecedented power on the data and the decision -making of the application, including veto power over the hiring of executives and changes in the privacy policies and content of the application. The White House has affirmed that the agreement will not imply that the US government acquires a “gold action” or capital in the new US entity, but doubts persist on whether the agreement includes special access to the US government to data or control over policies.
This article was originally published by Forbes Us.
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