China Keeps TikTok Algorithm Under US Licensing Framework as Legal Questions Persist

A US ownership deal with Chinese technology at its core

A proposed agreement between Washington and Beijing would keep TikTok available to 170 million American users while shifting its US business to an American led investor group. ByteDance, its owner in Beijing, would retain the recommendation algorithm that powers the app and license that technology to the new US company.

As of September 20, 2025, senior officials from both countries had agreed on a framework, with Presidents Donald Trump and Xi Jinping expected to speak to seal or reshape it. The plan seeks to resolve a difficult conflict: Washington wants American control over a platform it considers a national security concern, while Beijing wants to protect valuable Chinese technology.

A US law passed in 2024 requires ByteDance to divest TikTok's American business or face a ban. The Supreme Court upheld that law. The administration has extended the deadline several times, with the current deadline in December, leaving more time to negotiate an arrangement that would prevent a shutdown.

Trump told reporters on Friday that a signing process could begin soon. The president expressed confidence about completing the agreement:

We look forward to getting that deal closed,

Trump also said the United States would have:

very tight control of the app.

The framework would preserve a service used by creators, small businesses and political campaigns. Its central test is whether American ownership, local data storage and government oversight can meet US security requirements while the technology behind the feed remains owned by ByteDance.

Who would own and oversee the US business?

A new company would operate TikTok in the United States, with American investors holding a majority of its shares. People familiar with the negotiations describe a structure that would reduce ByteDance's stake to below a fifth, or less than 20%, to comply with the law.

Oracle and several large venture firms are among the names discussed for the investor group. Existing investors in ByteDance from outside China would be counted on the US side of the ownership arrangement.

A board dominated by US citizens would oversee the business, and the US government would designate one director. The proposed structure seeks to put responsibility for the American service in the hands of people and companies subject to US oversight.

ByteDance would retain a significant minority investment and brand control. Users would continue to encounter the familiar TikTok name, appearance and behavior, even as ownership and governance of the American operation changed.

Ownership is only one part of the arrangement. The proposed company would also need a workable relationship with ByteDance because the algorithm, technical documentation and potentially continuing support would remain central to operating the service.

How American user data would be separated

All US user data would be stored on infrastructure in the United States under the plan. Oracle would continue to host and monitor that information, with safeguards intended to identify suspicious activity and unusual access.

Chinese officials have described an entrusted operation model for US user data and content security. That points toward a technical separation between the American service and engineering resources in China, alongside the proposed change in ownership.

Audits, access controls and detailed records would support that separation. The company would be expected to maintain separate development and security teams for the US service and preserve logs showing who accessed information, when they did so and why.

Such records matter because investigators need to trace actions to particular people and decisions. A clear chain of responsibility could help establish who changed a system, whose approval they received and whether anyone accessed information without permission.

Engineers in China would be kept from accessing American information under these proposed safeguards. Their practical strength would depend on how access permissions, monitoring and enforcement worked inside the company, including during routine maintenance and urgent technical problems.

Why ByteDance would license the algorithm

TikTok's recommendation algorithm decides which videos appear in a user's feed. It learns from watch time, swipes, comments, shares and thousands of small interactions, then uses those signals to predict what a person is likely to watch next.

The appeal of that system helps explain why the algorithm has been the hardest part of the negotiations. Other companies have tried to reproduce the experience, while TikTok's feed remains unusually effective at predicting what will hold a viewer's attention.

China restricts exports of advanced recommendation technology and artificial intelligence. Those rules have blocked an outright sale of TikTok's core code, making a license the proposed compromise.

A license would give the American company legal permission to use the technology while ByteDance kept ownership. ByteDance would also likely retain a role in updates, documentation and support. Any sharing of code, models or training methods would face government review in Beijing.

In simple terms, the American company would pay for permission to use the engine behind TikTok's feed rather than buy that engine outright. Ownership of the US business and ownership of its most valuable technology would sit with different companies.

Engineers in the United States could rebuild parts of the ranking system to reduce dependence on Beijing. A possible US version of the app has also been described as operating with a more limited software stack, meaning a smaller set of underlying software components.

That approach could protect sensitive technology in China. It could also leave the American engineering team replacing components excluded from the license, potentially slowing improvements or making the experience less polished during the transition.

Who would control changes to the feed?

A recommendation system can influence what users see through choices built into its code and model weights. Model weights are the settings a system learns during training that help determine how it ranks information.

Those choices affect the balance between fresh videos and familiar interests, the treatment of borderline content and the system's response to government requests. Keeping user data in the United States would address one security concern, while control over the ranking system would require its own safeguards.

If software updates originated in China, American operators would need a way to examine them before release. Security reviews, reproducible builds and a local approval process could help. Reproducible builds allow reviewers to check that software created from inspected code matches the version intended for use.

A US team able to pause or reject an update would have a practical means of controlling changes before they reached users. Without a functioning review process, written oversight requirements could have little effect on how the system operated.

The framework leaves several operational details unsettled: who would control updates; where models would be trained and adjusted; whether American training data would leave the country; and how much access US engineers would receive to source code, model weights and documentation. Terms covering engineering support, emergency fixes, revenue sharing, moderation and recommendation policies would also shape the new company's independence. No closing date was given, and corporate approvals, including ByteDance's, were still needed.

What China would retain

China would preserve ownership of the algorithm while allowing ByteDance to continue earning money from licensing it to an American company. Beijing could present the arrangement as an export of advanced technology on Chinese terms and as protection for a prized national champion.

ByteDance's continuing stake and brand control would keep it connected to TikTok's American business. The service could remain familiar to users while its ownership, data arrangements and management became more closely tied to the United States.

A US adviser close to the negotiations described the central trade in blunt terms:

After all this, China keeps the algorithm.

Chinese officials could frame the result as a commercial agreement consistent with domestic law. That political framing matters while Washington and Beijing are also discussing tariffs, export restrictions and meetings between their leaders.

The structure could also offer other Chinese companies a possible way to remain in sensitive overseas markets: license valuable technology while accepting changes to local ownership and operations. Its usefulness would depend on whether the TikTok arrangement satisfied the American legal and security requirements.

What Washington would gain

The United States would gain local control of American user data, a board subject to accountability and a clearer legal structure for audits and enforcement. Keeping TikTok available would also avoid the political costs of removing an app used by millions of voters and businesses.

Treasury Secretary Scott Bessent, a central figure in the negotiations, said the administration had sought an agreement that allowed a commercial transaction while meeting US security demands:

We were very focused on TikTok and making sure that it was a deal that is fair for the Chinese and completely respects US national security concerns, and that is the deal we reached.

Oracle's continuing role would provide both data hosting and monitoring for unusual access. A government designated board member would create another channel for oversight of the American company.

The licensing arrangement could also give US operators time to replace or rebuild components that national security officials later wanted removed. A gradual technical transition could preserve the service while engineers worked on areas considered sensitive.

For investigators and regulators, clearer responsibility would be a concrete gain. Records of data access and software changes could make it easier to identify which person or team made a decision and under whose authority they acted.

The law remains a central test

The 2024 divestment law and the Supreme Court decision upholding it remain the legal foundation of the dispute. The administration's repeated deadline extensions have created room for negotiations, but lawmakers are questioning whether continued reliance on ByteDance technology fits the law's requirements.

Representative John Moolenaar, chairman of the House committee on the Chinese Communist Party, warned that the proposed license could preserve a channel for Chinese influence:

I am concerned the reported licensing deal may involve ongoing reliance by the new TikTok on a ByteDance algorithm that could allow continued CCP control or influence.

Regulators would examine whether a foreign adversary could still control a platform reaching a large share of Americans. A majority American ownership structure would be considered alongside the practical powers retained through the algorithm and the licensing relationship.

The arrangement would likely face review by US national security officials and could acquire further conditions before completion. Congress could seek to block the framework or require deeper changes if lawmakers concluded it fell short of the statute.

State attorneys general could also examine consumer protection issues involving data handling and content moderation across separated technical systems. For users and businesses, the legal review would determine whether the proposed structure delivered a lasting basis for keeping TikTok operating.

The dates shaping the negotiations

The TikTok dispute has moved from legislation and a court ruling to a negotiated framework. Repeated deadline extensions have kept a commercial solution in play while the two governments work through ownership, technology and security terms.

• 2024: Congress passed the law requiring ByteDance to divest TikTok's US business or face a ban.
• Before September 20, 2025: The Supreme Court upheld the law, and the administration extended the deadline several times.
• Friday, before the September 20 article date: Trump told reporters that a signing process could begin soon.
• As of September 20, 2025: Senior US and Chinese officials had agreed on a framework, and Trump and Xi were expected to speak about the deal.
• December: The current extended deadline would bring the divestment or shutdown question back into focus.

The presidents might also meet later at Asia Pacific Economic Cooperation, or Apec. A TikTok agreement could ease tensions before broader discussions of tariffs, export controls and market access.

What users and creators might experience

American users might notice little immediate change if the arrangement proceeded. The familiar interface and creator communities would remain, helping businesses and campaign teams continue using an established channel to reach audiences.

Differences could emerge over time if the American service used a narrower software base or needed to replace components excluded from the license. The feed might feel less responsive during a transition as US engineers rebuilt systems or trained models using local data.

Content discovery could also change. A feed shaped by American training data and American content policies might give more attention to domestic creators. Advertising systems could adjust as they learned audience interests within a more isolated pool of information.

Slower update processes could produce performance problems or delay product changes. Emergency patches and routine bug fixes would require reliable cooperation across the technical split, especially if the American app began to differ from the global service.

Moderation would be another practical concern. The company responsible for the US service would need authority over content rules, civic integrity and recommendation policies, alongside the technical capacity to put those decisions into effect.

A wider bargain over software and trade

The proposed TikTok structure brings together three different forms of control: ownership of the company, custody of user data and ownership of the technology. Washington would gain more authority over the first two, while ByteDance would retain the core code through a license.

That arrangement could influence future negotiations involving Chinese cloud services, online commerce platforms or recommendation systems. Other governments could also seek comparable conditions from American companies operating abroad.

Licensing would create a continuing commercial relationship between the American operator and ByteDance. The payment terms could affect how much bargaining power each side retained, while disagreements over updates, audit rights or compliance could become subjects for diplomatic talks.

Trump and Xi would therefore be discussing more than the immediate availability of a popular app. A successful agreement could show a way to manage a difficult technology dispute while preserving access for users. Disputes over the license could instead add another point of friction to an already complicated trade relationship.

For the 170 million Americans using TikTok, the immediate purpose is simpler: keep the app working under an arrangement that answers US security demands. The ownership framework provides a proposed structure; its legal terms and technical controls would determine how that structure functioned.

Key Points

• US and Chinese officials agreed on a framework to keep TikTok operating under an American led ownership structure.
• ByteDance would hold less than 20% of the US company while retaining the algorithm and licensing it to the American operator.
• Oracle would continue hosting and monitoring US user data on American infrastructure.
• A board dominated by US citizens would include a government designated director.
• The 2024 divestment law remains in force, with the current extended deadline in December.
• Lawmakers have questioned whether continuing reliance on ByteDance's algorithm would allow Chinese control or influence.
• Update approval, training locations, code access, support and licensing payments would shape the company's practical independence.
• Users could see little immediate change, with later differences possible as the American service developed separately.
• Trump and Xi were expected to discuss the framework, with corporate approvals and likely US security review still ahead.