US-TikTok Deal: Implications for Chinese Tech Giants

Mon Jan 26 2026 06:07:42 GMT+0200 (Eastern European Standard Time)

The recent agreement to separate TikTok's US operations from its parent company ByteDance highlights the geopolitical pressures on Chinese tech companies. As the rivalry between the US and China intensifies, implications for TikTok and its users may reshape global tech narratives.

In light of national security concerns, TikTok, one of the most popular social media platforms globally, has undergone significant changes to its operational structure in the US. The new deal allows ByteDance to retain user access but at the cost of losing control over its data and algorithms. This development underscores a shift in how Chinese tech firms navigate international markets amidst escalating geopolitical tensions.

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 aiming to remove TikTok from US stores.

Lawmakers were worried that the Chinese government could access the 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.

That 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, including 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 in the most recent trade war, TikTok became low hanging fruit that China could offer in exchange for other important concessions, like 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.

However, 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 by the Trump administration at $14bn (£10bn). As analysts note, With a US joint venture retraining that algorithm on domestic data, the experience will change... One thing's certain: TikTok in America won't be the same. This could have significant consequences for creators and advertisers.

Creators may see their engagement shrink as a US-only algorithm could weaken the potential for global virality. Therefore, brands may have to restructure deals, possibly incurring higher costs for US exposure.

Despite these challenges, ByteDance maintains a 19.9% stake in TikTok, preserving a share of the profits. The split may also hinder ByteDance's overall technology development due to increased operational complexity and costs.

Comparatively, the experience with India, where ByteDance lost access to 200 million users in 2020 amid broader tensions, indicates the unpredictable nature of geopolitical landscapes affecting technology companies.

As governments become increasingly scrutinous of Chinese tech firms, TikTok's situation might serve as a template for future deals, suggesting other Chinese companies could operate under similar restrictions when navigating international expansions.