U.S. Reaches Deal to Lease TikTok Algorithm from ByteDance

The Trump administration has reached a deal with China that would allow TikTok to continue operating across the U.S. by leasing its content recommendation algorithm from ByteDance rather than selling it, Axios reports.

Under the new framework ByteDance would duplicate the algorithm, then lease that version to a U.S.-controlled joint venture led by investors including Oracle, Silver Lake and Andreessen Horowitz.

This arrangement responds to a 2024 U.S. law which demands that TikTok either come under American control or face a nationwide ban. Selling the algorithm was considered earlier but dismissed because ByteDance wants to keep using the technology in markets outside the U.S.

Under the deal, Oracle would play a central role ensuring data security. Oracle is expected to rebuild and retrain the duplicated algorithm so that U.S. user data is safeguarded on U.S. servers. The board of the new U.S. entity would be majority American-owned, with ByteDance retaining less than 20% of the ownership stake.

President Donald Trump is expected to sign an executive order later this week to confirm the structure of the deal. He has also granted a further 120-day extension to enforce the law requiring divestment or ban in order to complete final details. Some lawmakers in Congress have, however, expressed concerns over whether leasing the algorithm constitutes “cooperation” with ByteDance which is restricted under current legislation.

Beijing has reportedly given preliminary approval to the deal during diplomatic talks held in Madrid. Yet Chinese government statements have been more ambiguous in public than those of U.S. officials.

The U.S. government will not hold an equity stake nor place a government representative on the board, but American investors and some existing ByteDance investors will share control under the new governance structure. The proposal aims to balance national security demands in Washington with the commercial interests of ByteDance.