TikTok's US Spin-Off to License Chinese Algorithm Amid Security Concerns

The United States version of TikTok will license its recommendation algorithm from its Chinese parent company, ByteDance, according to Wang Jingtao, deputy head of China's cyber security regulator. Wang stated that US and Chinese officials have agreed on a framework that includes 'licensing the algorithm and other intellectual property rights.'

This development comes amid ongoing concerns from US officials about the potential for the algorithm to be manipulated to push propaganda or polarizing material to American users. The recommendation algorithm is central to TikTok's ability to serve personalized content, but its Chinese origins have raised national security questions.

An Asia-based investor in ByteDance indicated that the new US TikTok entity would use at least part of the Chinese algorithm but train it in the US on American user data. The investor noted that Beijing's bottom line is a licensing deal, aiming to be seen as exporting Chinese technology to the US and the world.

The agreement follows two days of talks in Madrid between American and Chinese officials to finalize a deal that would keep the Chinese-owned app operational in the US. The Trump administration has previously intervened to ensure TikTok's availability, despite US laws requiring ByteDance to divest its American operations or face a nationwide ban.

China's top trade negotiators have indicated that Beijing would approve the export of TikTok's algorithm. US Treasury Secretary Scott Bessent mentioned that the spun-off app would be controlled by American investors but retain some 'Chinese characteristics.'

It remains unclear to what extent ByteDance would retain control over the algorithm in the US as part of the licensing deal. Analysts suggest that the algorithm must be fully operated by the US entity to meet the requirements of the divest-or-ban law signed by then-President Joe Biden last year. However, the law allows the US president to determine if ByteDance has fully divested from TikTok, giving President Trump the authority to approve the deal.