The White House, on September 16, gave yet another lease of life to TikTok to operate in the US. The owner of the popular video-sharing app, ByteDance, will have until December 16 to divest and transfer control to an American entity. Several corporates have evinced interest in buying the app, which boasts of having 170 million American users.
The Fears Around TikTok
Earlier, fears had been expressed that through the app, precious American data could be stolen or the access could allow the Communist Party of China (CPC) to conduct espionage remotely. Another apprehension was that through Chinese control of the app, the CPC would be in a position to manipulate public opinion in America. During Trump's first term, the Senate had unanimously passed a bill to prohibit downloading the app on devices issued by the government, citing such national security risks. The worries that TikTok was a Trojan horse, coupled with the growing Sino-American tussle over technology, led to the Joe Biden administration passing the 'Protecting Americans from Foreign Adversary Controlled Applications Act' in 2024. However, Trump 2.0 has not acted to enforce the legislation, and the deadline to divest ownership has been extended three times in the past.
As a result of the legislation, an agreement with China on TikTok in Trump's current term will have to pass muster in Congress. The future of the app's US operations came up during negotiations between the US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng in Madrid recently. While both sides have arrived at a "framework" for the sale of TikTok's US operations, few official details are out in the public domain. As media reports suggest, the new US company, which will operate the app, may comprise American investors having a stake of approximately 80%, with Chinese investors retaining the remaining (below the 20% limit, as prescribed by the law). News reports have also suggested that, along with the app coming under the control of a US company, it will also have a board member nominated by the Trump administration.
What's Trump Thinking?
If the agreement eventually fructifies, then it gives us an indication into the thinking of Trump 2.0 with respect to economic security being a key element of national security. The Trump administration similarly greenlighted Nippon Steel's $14 billion acquisition bid for US Steel, in a deal that allows America to select a member of the board in addition to retaining a 'golden share'. The gold share makes the US government a stakeholder in decisions on closing down US Steel's existing manufacturing facilities in the country, and issues like trade, labour, and sourcing from outside.
However, the issues related to economic and national security in a brick-and-mortar industry like steel and a social-media app are a world apart due to the consumer base. Treasury Secretary Bessent has said that the agreement with China balances America's national security requirements, along with fulfilling Beijing's expectations regarding its interests, too. While China has spun the development as a win for its technological prowess, the Cyberspace Administration of China (CAC), the cybersecurity watchdog, maintains that it is essentially an accord over Beijing 'licensing the right to use algorithms' and 'intellectual property' to the US, subtly furthering the narrative that it is promoting the export of China's advanced knowhow overseas.
What About ByteDance?
This "routine" commercial deal is being billed by Beijing as a step to promote the stable and sustainable Sino-American economic and trade relations. Wang Jingtao, CAC's Deputy Director, stated that Beijing will decide and approve matters related to the export of TikTok's technology and licensing and usage rights of intellectual property in accordance with Chinese law. It is not clear how much leverage TikTok's developer, ByteDance, will have over the algorithm under the licensing agreement. The US House Select Committee on China has sought complete divestment by ByteDance and a fully decoupled algorithm.
US President Donald Trump and Chinese President Xi Jinping spoke on September 19, discussing trade issues in which the agreement over TikTok was mentioned. The Chinese readout of the Xi-Trump call stressed 'mutual benefit'. Trump and Xi will also be meeting on the sidelines of the forthcoming Asia-Pacific Economic Cooperation Forum in South Korea, and the former has indicated that he may travel to Beijing next year; hence, he would not like to displease Xi. Another reason for Trump's leniency could be that his popularity has soared among the app's user base, with his personal account having a following of 15 million. These dynamics could have played a part in Washington giving TikTok a long rope. The moot question is whether the notion of mutual benefit means that Washington will change its posture towards Beijing from open confrontation to striking profitable deals, given the transactional nature of Trump 2.0.
(Harsh V Pant is Vice President, Observer Research Foundation, New Delhi. Kalpit Mankikar is Fellow, China Studies, at ORF.)
Disclaimer: These are the personal opinions of the author
