The US-TikTok Deal: Transforming China's Tech Landscape

Wed Feb 04 2026 08:47:44 GMT+0200 (Eastern European Standard Time)

The recent agreement between ByteDance and U.S. regulators marks a significant shift for TikTok and other Chinese technology firms facing global expansion challenges amidst geopolitical tensions.

TikTok's new operational framework in the U.S., born from security concerns, highlights the complex dynamics between China and American tech governance. The agreement allows ByteDance to maintain access to millions of U.S. users while losing control over its algorithm, reflecting a broader shift in how Chinese tech companies navigate international markets under restrictive conditions.

One in seven people in the world use TikTok. Yet for the company behind such a cultural phenomenon, the last few years have been a rollercoaster.

Concerns over the app first surfaced more than five years ago, prompting President Trump, in his first term, to sign an executive order aimed at removing TikTok from US stores. Lawmakers worried that the Chinese government could access user data of the 200 million Americans who use the app and possibly manipulate their feeds.

To address these concerns, TikTok's parent company ByteDance launched Project Texas – storing US user data on domestic servers run by American-owned Oracle. The company also moved its headquarters to Singapore and Los Angeles – in part to distance itself from its Chinese roots.

These were seen as significant concessions at the time. But still, in 2024 Congress passed a law threatening to ban the app outright unless ByteDance transferred majority ownership and changed how TikTok operates in the US.

The deal has now closed with ByteDance signing an agreement to split the US app from the rest of its global business under a new consortium of companies that includes Oracle. TikTok remains alive in a critical market, but the terms underline the compromises and limits that ByteDance - and perhaps other Chinese tech firms - may face as they try to expand globally.

The US-China rivalry has seen Washington and Beijing crack down on each other's firms over national security concerns. Yet TikTok became low hanging fruit that China could offer in exchange for other important concessions, such as American agricultural products. The deal allows China to frame the outcome as a win - exporting tech on its own terms while gaining leverage in broader trade negotiations.

ByteDance will retain access to America's 200 million users and 7.5 million businesses, but it loses control over TikTok's algorithm and data. Instead, the company will licence the algorithm to the new US entity, valued at $14bn (£10bn) by the Trump administration.

This shift could have knock-on effects for advertisers and creators because of the changes expected. Creators may see their engagement shrink due to a US-centric algorithm, ultimately affecting TikTok's revenue as advertising plays a major role.

In summary, the TikTok deal signals a new reality for Chinese technology champions and reflects broader geopolitical tensions, affirming the complexity of navigating international tech landscapes in the modern world.