Unexpected Scenarios in the TikTok Deal – A Game of Interests

The debate about the future of TikTok in the USA enters a new chapter. Although President Trump's recent executive order temporarily saves the Chinese social media app from a ban, the stage is set for exciting developments. The order allows the involved parties another 120 days to avert a law decided earlier in 2024. Details of the agreement and their implications remain unclear, but the influence of geostrategic and financial interests cannot be ignored. A central point is the restructuring of the TikTok service in the USA. According to the White House, the US portion of the app is to be separated from the Chinese parent company ByteDance and placed under the control of a joint venture that is majority US-owned. User data will be stored in American data centers, operated by Oracle, to address privacy concerns that were already addressed in 2022. Additionally, the joint venture will take responsibility for the algorithm that controls the displayed videos. Interestingly, despite political concerns, the actual algorithm remains the work of ByteDance. The executive order emphasizes that the operations of the algorithm and content will be moderated, but the possibility of a complete redevelopment of the algorithm remains open. It remains questionable how effectively a US filter could reduce the influence of a Chinese algorithm and whether this would lead to a less attractive version of TikTok for young users. Additionally, a report from Bloomberg reveals that ByteDance receives 20% of the revenue and up to 50% of the profit as part of a licensing agreement, allowing the company to retain a financial stake despite the sale. The valuation of the deal is considered low by analysts and contrasts with market estimates. It has also become known that Silver Lake, Oracle, and MGX will hold a 45% stake in the new joint venture. A reserve of 5% of the shares is currently being allocated for new investors. Names like Rupert Murdoch and Michael Dell have been mentioned as possible candidates. Future market plans, including a potential IPO, could propel TikTok into a new growth phase. Although ByteDance reduces its presence in the USA with the deal, this could ultimately pave the way for an IPO of the company, which has previously been blocked by regulatory hurdles and uncertainties surrounding TikTok. The turbulent journey of TikTok in the USA may still hold many surprises, but whether the American public will benefit from these developments remains to be seen.