US-TikTok Deal: Implications for Chinese Tech Dominance

Fri Jan 23 2026 18:57:59 GMT+0200 (Eastern European Standard Time)

TikTok's recent agreement to separate its US operations from its global business marks a turning point for China's tech giant ByteDance amidst escalating US-China tensions.

TikTok's owner, ByteDance, has successfully navigated intense scrutiny and legal challenges to secure a new operational structure in the US. By transitioning a majority stake in TikTok's American operations to a consortium that includes Oracle, the move aims to retain access to its vast user base while placating US lawmakers' security concerns. However, this restructuring raises questions about the app's future functionality and highlights broader implications for Chinese technology companies operating globally.

US-TikTok Deal: Implications for Chinese Tech Dominance

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 aimed at removing 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 been finalized, with ByteDance signing an agreement to split the US app from the rest of its global business under a new consortium that includes Oracle.

TikTok remains alive in a critical market, but the terms underline the compromises ByteDance - and perhaps other Chinese tech firms - may face as they try to expand globally. It allows China to frame the outcome as a win while gaining leverage in broader trade negotiations.

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 license the algorithm to the new US entity, in a deal valued at $14 billion.

This shift could have knock-on effects for advertisers and creators due to changes in how content is distributed and engaged with.

Geopolitical Implications

The US-China rivalry has seen Washington and Beijing cracking down on each other's firms over national security concerns.

In both the US and India, ByteDance's operations have faced significant challenges due to geopolitical tensions, with the loss of India being a far bigger setback than potential disruptions in the US.

The Road Ahead for TikTok

While TikTok faces restrictions and changes in its US operations, it retains its full control over Douyin, its successful Chinese counterpart. As ByteDance invests in cloud services and AI to diversify from advertising-led revenue, TikTok's experience could serve as a template for other Chinese tech companies navigating increasing scrutiny in Western markets.

The reality is that ByteDance will continue to operate TikTok in the US, albeit with distinct limitations. This situation may influence other markets where it seeks to expand, reflecting a cautious approach from regulators towards Chinese technology.