It is still unclear who will control TikTok's algorithm, which is considered the most important aspect of the app.
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While TikTok's parent company and Chinese-owned ByteDance announced a partnership with US companies, including Oracle, TikTok's US operation, several questions remain unanswered. Most importantly, it is still unclear who will control TikTok's most important aspect, its algorithm.
TikTok's algorithm, which is considered very powerful, recommends videos based on the user's interests and personality. This is why users stay on TikTok for a long time, watching and scrolling through one video after another.
A few months ago, there was news that ByteDance was preparing to close the app in the US rather than hand over its special algorithm. In addition, official approval from the Chinese government is required for this agreement to proceed, and it has not yet been received.
While Meta runs an algorithm based on the relationships between its users, i.e. the 'social graph', TikTok uses technology to understand the interests, personality, and behavior of users to decide which content to show to whom.
To some extent, TikTok tries to present content accordingly by understanding what a single user likes to watch at different times of the day. Technology experts say that TikTok has gained some advantage over Meta in this area because it is a platform built for mobile from the beginning. Therefore, TikTok's content recommendation algorithm is considered powerful and special.
Last Thursday (December 18), TikTok CEO Sou Ji-chiu officially announced the sale of 50 percent of his shares to Oracle, Silver Lake and MGX. With this, ByteDance will now own 19.9 percent of TikTok's US operations and the remaining 30 percent will be held by existing global and US investors. If the transaction is completed, the company will move forward through a new management unit called 'TikTok USDS Joint Venture LLC', according to US media.
The US government has linked TikTok to national security, saying that the personal details (data) of about 170 million US users through TikTok and ByteDance could reach the Chinese government and that the Chinese Communist Party could use the app's algorithm to distort the opinion of the American people or spread propaganda.
Accordingly, the then Joe Biden administration decided to ban TikTok in the US by enacting a law last year that either ByteDance had to sell most of TikTok's US ownership to US investors or else ByteDance would have to sell most of TikTok's US ownership to US investors. TikTok was down in the US for several hours on January 18 and 19 after ByteDance refused to sell it. Apple and Google removed TikTok from the US app store.
After Trump was re-elected as president, he announced the lifting of the ban on TikTok in his first executive order. He posted on Truth Social that he would save TikTok. During his previous term, Trump was not happy with TikTok. After his second term, he extended the ban by 75 days (until April 4) and then again until June 19, September 16 and December 16.
Meanwhile, Trump tasked Vice President J.D. Vance, billionaire Elon Musk and National Security Advisor Michael Walz with finalizing the TikTok purchase and sale deal. Vance negotiated with potential buyers on the technical and financial structure and persuaded lawmakers. He had announced that the market valuation of TikTok's US operations was $14 billion. Musk, who has a good business relationship with Tesla, has acted as a mediator with the Chinese government and advised the Trump administration on technical aspects such as algorithms. Walz was assigned by Trump to “assess the risks” of the deal.
Writing on social media, Rush Doshi, who served on the National Security Council under President Biden, said it was unclear whether the algorithm was transferred, licensed, or whether Beijing still controlled the app’s algorithms. According to him, Oracle’s access appears to be limited to external systems.
The Chinese government has not yet commented on the deal. In 2020, Beijing amended its export laws to require government approval for exporting algorithms and source code. This provision has left it unclear whether TikTok’s US operations will be sold or spun off.
