Short answer: ByteDance, TikTok’s China-based parent, may still collect roughly half of TikTok US profit even after selling a majority stake to American investors. The bulk comes from a paid license for TikTok’s recommendation algorithm plus profit tied to ByteDance’s remaining equity.
On Thursday, President Donald Trump signed an order outlining the transfer of TikTok’s US business to a new US-led group. The White House says the move lets TikTok keep operating while meeting security requirements in a 2024 law that sought a sale or ban. The deal still needs final steps and China’s position remains unclear.
What’s new?
Bloomberg reports ByteDance will likely receive about 50% of TikTok US profit through an algorithm-licensing fee plus its minority equity share, even after Americans take control. China hasn’t issued a formal approval, and key commercial terms can still shift.
Table of Contents
What’s actually in the deal right now
Ownership and board: Reuters says ByteDance would keep <20% equity in TikTok US, with Americans holding the rest and six of seven board seats. That satisfies the letter of the 2024 divestment law, according to the administration.
Buyers: The US consortium is expected to include Oracle, Silver Lake, and Abu Dhabi-based MGX, alongside some existing investors. Specific allocations haven’t been published.
Status and timing: Donald Trump has repeatedly extended enforcement deadlines to keep TikTok online while talks progressed. The White House website lists extensions through December 16, 2025. The executive order supporting the proposed deal was signed September 25, 2025.
Why an algorithm license matters
The heart of TikTok is its “For You” algorithm. Under the reported plan, TikTok US would pay ByteDance to license that technology, rather than taking full ownership of it. That recurring fee could be coupled with a revenue share from ByteDance’s minority equity-together driving ByteDance’s cut to about half of US profit.
How “half the profit” could work (simple math)
Bloomberg’s sourcing points to a structure where ByteDance receives an algorithm fee plus profit tied to its equity. One scenario discussed in coverage is a ~20% cut of incremental revenue attributed to the algorithm and another ~20% via its equity share numbers that, depending on cost and revenue assumptions, could bring ByteDance’s take near 50% of profit. For illustration, if TikTok US revenue were $20B, a 20% algorithm cut implies ~$4B before equity-linked profit. Exact terms aren’t public, so treat these as directional.
A separate flashpoint is valuation. Bloomberg reporting put the US business near $14B in this transaction framework far below some analyst estimates. A lower sticker price can make more sense if the US entity must keep paying for its core tech.
The open questions regulators care about
- Compliance vs. control: If ByteDance licenses the algorithm and earns large profits, does that satisfy “severing control” under the 2024 law? Capitol Hill wants clarity and briefings.
- Data and model access: Reuters reports the new joint venture would oversee data, content policy, and the algorithm in the US. How airtight those firewalls are will be scrutinized.
- China’s role: Trump said he discussed the deal with Xi Jinping, but Beijing hasn’t publicly endorsed it. China’s export rules on recommendation tech could still bite.
What changes for users in the near term
In the short run, not much. The app stays online in the US while the deal is papered and reviewed. Policy shifts like moderation transparency or data-handling disclosures may be more noticeable than product tweaks. Expect branding and “US data governance” messaging once the JV structure is locked.
Timeline and what to watch next
- Sept 25, 2025: Trump signs the order supporting the proposed sale.
- Now → Q4 2025: Buyers finalize terms, board setup, and licensing agreement; Congressional oversight intensifies.
- By Dec 16, 2025: Current enforcement extension expires, per the White House site. Another delay is possible if closing drags.
Pros and cons at a glance
| Aspect | Potential upside | Potential downside |
|---|---|---|
| Keeps TikTok running in US | Avoids sudden ban and user disruption | Ongoing political risk if terms seen as too soft |
| Security & governance | US-majority board, US data rules | ByteDance still deeply tied via algorithm license |
| Economics | US investors gain majority of equity | ByteDance may still capture ~half the profit |
Comparison Table who gets what, at a glance
| Bucket | Party | What they get | Status |
|---|---|---|---|
| Equity | US consortium | ~80% ownership, 6/7 board seats | Reported, not final |
| Equity | ByteDance | <20% ownership, 1 board seat | Reported, not final |
| Licensing | ByteDance | Ongoing algorithm-use fee | Reported concept |
| Profit share | ByteDance | Profit tied to its equity | Reported concept |
Frequently Asked Question
What is the reported TikTok US valuation in this deal?
Around $14B, per Bloomberg/Yahoo Finance coverage lower than some prior estimates, partly because the algorithm stays licensed.
Will ByteDance still influence decisions?
Reuters says ByteDance would appoint one of seven directors; Americans hold six seats, limiting formal control. Influence via licensing terms is a fair question for regulators.
What happens if the deal doesn’t close by December 16?
The current enforcement delay expires then; the White House could extend again or move to enforce. Watch for updates.
How will user data be handled?
A US-based joint venture is expected to control data and algorithm operations domestically, per Reuters.
Who’s in the US buyer group?
Reports point to Oracle, Silver Lake, and MGX, plus existing investors; final cap table is pending.
Did Xi Jinping agree to the deal?
Trump said Xi agreed in principle; China’s official stance isn’t published yet.
Will my TikTok experience change?
Short term, unlikely. Expect policy communications more than product changes while paperwork finishes.
Why is Congress asking questions now?
Lawmakers want to ensure the arrangement meets the 2024 law and that ByteDance’s access to the algorithm is cut off in practice.
Featured Answer Boxes
How much profit could ByteDance keep after the Trump TikTok deal?
About 50% of TikTok US profit, via an algorithm-licensing fee plus ByteDance’s minority equity share, according to Bloomberg’s sources. Terms could change before closing.
Who will own TikTok US?
A US-led group, reportedly including Oracle, Silver Lake, and MGX, with ByteDance under 20% and six of seven board seats held by Americans.
Does China need to approve the deal?
Yes. The order is signed in the US, but China hasn’t issued a formal approval as of now.
Why license the algorithm instead of selling it?
Licensing lets the US entity use TikTok’s core tech while ByteDance retains ownership—key to the reported profit split.
Source:
