TikTok users in the US probably breathed a sigh of relief when a couple of days ago, it was announced that the US and the Chinese government had reached a deal that would allow TikTok to remain operational in the US. However, this deal is done and dusted yet. According to a report from CNBC, it could take a month to work this deal out.
TikTok US deal could take a month to work out
According to CNBC’s David Faber, sources told the reporter that the US and China are expected to close this TikTok deal in the next 30-45 days. This means that while there might be a spoken agreement, nothing has been signed or made official yet. It’s not surprising given the complexity of it.
This isn’t a simple deal of a US company buying out another company. There are a lot of geopolitical factors to take into consideration. Speaking on CNBC’s Squawk on the Street, Faber said, “I’m hearing it’s [the deal] actually going to be relatively small in terms of the actual size of the checks that are written for the entity itself, and it will not be something that is going to go public at some point.”
It’s complicated
As Faber notes, there might not be huge monetary gains here. We’re not talking about the deal where the US pays China a certain amount of money for TikTok. However, there are quite a bit of technological and political gains to be considered.
For instance, the US government buying TikTok from China through a US-based company would allow the government better control over the app and its data. There have been concerns that ByteDance could be sending data back to China on US users.
Secondly, China considers TikTok’s algorithm as a critical piece of technology. Typically speaking, these classifications greatly restrict what can or cannot be sold to non-Chinese entities. Thirdly, this deal would essentially allow China/ByteDance to license TikTok’s algorithm to the US.
Last we heard, TikTok engineers are expected to reverse engineer the algorithm. This will ensure that it complies with US regulations, while also making it something that is truly unique to the US market. As it stands, TikTok and Douyin (China’s version of TikTok) have slightly different algorithms. While the concept of the apps are similar, Douyin caters towards Chinese users. It also has to adhere to China regulations on what type of content is allowed.
It is possible that once TikTok engineers tweak this algorithm, our TikTok feeds could end up looking very different.