As the U.S. government intensifies its scrutiny of TikTok over national security concerns, existing investors in ByteDance, the app’s Chinese parent company, have emerged as front-runners in negotiations to acquire TikTok’s U.S. operations. According to two sources familiar with the discussions, the White House-led talks are focusing on a plan that would allow ByteDance’s largest non-Chinese investors to increase their stakes and form a new U.S.-based entity for TikTok. This move aims to reduce Chinese ownership in the app to below 20%, a threshold mandated by U.S. law, and avert a potential ban.
The proposed plan involves spinning off TikTok’s U.S. operations into a separate entity, effectively diluting ByteDance’s ownership and addressing concerns raised by the Committee on Foreign Investment in the United States (CFIUS). The U.S. government has long expressed fears that TikTok’s Chinese ownership could compromise user data security, allegations that ByteDance has repeatedly denied. By reducing Chinese ownership and establishing a U.S.-based entity, the deal could provide a pathway for TikTok to continue operating in the U.S. market, which boasts over 100 million users.
The discussions come amid heightened tensions between the U.S. and China over technology and data security. President Donald Trump previously issued an executive order in August 2020 demanding ByteDance divest TikTok’s U.S. operations, citing national security risks. While the enforcement of the ban was delayed, the pressure on ByteDance to find a resolution has persisted. The involvement of existing investors, including U.S.-based firms such as General Atlantic and Sequoia Capital, signals a potential compromise that could satisfy regulatory requirements while preserving TikTok’s presence in the U.S.
However, the deal is not without challenges. Beijing has tightened restrictions on the export of artificial intelligence technologies, which could complicate ByteDance’s ability to transfer TikTok’s algorithms to a new entity. Additionally, the plan must navigate complex regulatory approvals and geopolitical sensitivities.
If successful, the deal could serve as a model for resolving similar disputes over Chinese-owned apps operating in the U.S. For now, all eyes are on ByteDance and its investors as they work to secure TikTok’s future in one of its most critical markets.
