The White House has given TikTok more time to pursue a U.S. deal if it can line up the financing while leaked details suggest a divestment plan that would put American investors in control of the video-sharing app’s core technology — at least initially. The move restarts the clock on a high-risk fight that implicates national security, geopolitics and the livelihoods of creators and advertisers alike.
U.S.-led ownership hinted at in leaked framework
Under that plan, which a WSJ article reported would be structured as part of a draft framework being discussed, around 80% of TikTok would be transferred to a U.S. consortium composed of Oracle, Andreessen Horowitz, Silver Lake, and others. Chinese stakeholders would hold onto the remaining slice, and TikTok’s most prized asset, its recommendation algorithm, would not be sold off but licensed from China-based ByteDance.
That setup would mirror aspects of the previously proposed “Project Texas,” in which Oracle acts as a cloud-infrastructure and security partner for U.S. data about TikTok users. What’s new this time around is not just the algorithm but its licensing model — an arrangement that has been crafted to circumvent Beijing’s export controls on AI and recommendation technologies, even while raising novel questions about control, accountability and compliance.
The Journal’s reporting matched earlier indications from administration officials that the divest-or-ban option was still being considered. It also is a reflection of long-running pressure by U.S. national security reviewers to isolate Americans’ data and system decision-making from ByteDance, which operates under Chinese law.
Security plays a huge part in this.
Security oversight at the center of any TikTok deal
Any deal would need to pass muster with the Committee on Foreign Investment in the United States (CFIUS), an interagency panel led by Treasury that reviews national security hazards. Previous versions of a TikTok fix have mulled over an American stand-alone subsidiary, a White House-cleared security director, a kind of source code reading room at the company’s office and hard-walled data localization on U.S. soil.
It’s the algorithm that’s the sticking point. A license may allow use but no ultimate control. (Limited liability companies can also be structured to strip away control, as have been some Chinese investments.) Former CFIUS officials say that effective control matters for risk mitigation, not just the level of equity ownership. If the model’s training, updating or governance continue to depend on ByteDance, Washington could insist on measures like code escrow, a priori review of updates and binding audit rights overseen by the Justice and Commerce Departments.
Approval from Beijing will also loom large. The full transfer is less likely because of China’s export regime for recommendation systems and AI, leading to the licensing compromise. But Chinese regulators may still seize up at a model where control over a culturally influential platform is so broadly placed in the hands of an American company.
Politics, profits, and platform risk for TikTok in U.S.
The extension buys time for negotiators and breathing room to a platform used by tens of millions in the United States — TikTok has said that it serves about 170 million Americans, a scale that creates economic weight and regulatory scrutiny. But the app’s penetration among teens and young adults is especially strong, according to Pew Research Center, and data analytics firms like data.ai have noted that TikTok has been consistently matching or surpassing other social platforms in time spent.
Investors close to the potential consortium could be some of the biggest winners if a deal falls into place, especially Oracle, which already hosts TikTok U.S. data. Critics say giving allies of the president an outsize role clouds the policy rationale. Proponents argue that a practical divestment is the least disruptive path to maintaining user access while mitigating security risks.
Advertisers and creators have been left in limbo. Brands require clarity to plan their budgets and creative pipelines; creators need assurances that their audiences are not going to disappear overnight. The brief, earlier blackout — when the app briefly went dark for American users during an enforcement drive — still hangs in industry memory as a cautionary tale of regulatory whiplash.
What to watch as TikTok sale negotiations proceed
First, the ownership and governance package: This is where you’re going to want specifics on board makeup, security leadership and whether the U.S. entity can independently update, train or fine-tune models without influence from ByteDance. Meanwhile, any reliance on licenses must be counterbalanced with auditable protections and clear lines of technical control.
Second, regulatory choreography: CFIUS review is the key, but Commerce enforcement guidance will dictate how a ban is implemented or lifted. On the other side, blessings from Chinese officials — frequently the Ministry of Commerce and internet regulators — could influence some final details to the licensing deal.
Third, continuity planning: If the United States experiences another outage, anticipate contingency plans that enable the app to run (somehow) until other compliance checkpoints have been achieved. That might involve staged deadlines, escrowed commitments and penalties based on technical deliverables rather than political deadlines.
The bottom line: the extended deadline merely pushes back a cliff-edge moment and does not solve the fundamental dilemma. A U.S.-led ownership stack with a licensed algorithm may be the sole politically tenable middle way. Whether it meets Washington’s security demands without crossing Beijing export red lines will determine if the most consequential dance in TikTok’s short existence — between two regulatory superpowers — concludes with a spinout or a bad landing.
