Opinion In US-China TikTok deal, an ‘adjust kar lo’ mindset
The rules of the digital economy will increasingly be co-written by states and markets together. The worry is if the TikTok deal is a rehearsal for AI governance
The agreement on TikTok's U.S. operations includes the appointment by ByteDance of one of seven board members for the new entity, with Americans holding the other six seats. (file photo) The video-sharing platform TikTok, used by nearly 200 million Americans, has survived its most serious confrontation with the US state. After years of legal, political and diplomatic brinkmanship, TikTok and its Chinese parent ByteDance finalised a restructuring of the platform’s US operations to avert a ban. Control will shift to a new American-led joint venture backed by tech giant Oracle, tech investment firm Silver Lake and Abu Dhabi’s MGX, while ByteDance will retain a minority stake and limited economic rights. The deal ends the immediate threat of exclusion, but more importantly, it marks a turning point in how rival powers now negotiate technology, sovereignty and interdependence.
At first glance, this appears to be a familiar story of regulatory pressure forcing foreign capital to localise ownership. But that reading misses the deeper significance of this deal. ByteDance will lease a copy of its recommendation algorithm to the US entity, allowing it to be retrained on American user data while being housed and secured within Oracle’s US cloud environment. The structure is designed to reassure Washington that American data and algorithms are insulated from Beijing, even as the commercial engine of the platform remains intact. TikTok may no longer be “Chinese” in America, but it has not ceased to be Chinese technology. What this redesign quietly alters, however, is not only sovereignty but the economics of attention itself.
The commercial logic of the deal is already visible. ByteDance’s private market valuation is estimated to be around $500 billion in recent weeks, rebounding sharply from lows below $300 billion when a US ban appeared imminent. Just over a year ago, TikTok briefly went dark for roughly 170 million US users after the ban-or-divest law took effect. The economic and political cost of a permanent shutdown would have been considerable, not only for ByteDance but for American creators, advertisers and voters who had woven the platform into their daily lives.
Yet the most consequential fault line in this debate was control of the algorithm. Washington’s anxiety centred on whether Beijing could retain influence over the system that curates information, shapes attention and increasingly mediates public discourse. The compromise now in place reflects “mutual-distrust tempered by pragmatism”. The algorithm will be secured, retrained and governed in the US, while ByteDance monetises its intellectual property through licensing. It is negotiated dependence, carefully ring-fenced and politically choreographed.
That choreography was on full display when US President Donald Trump, in his Truth Social post, thanked China’s President Xi Jinping for approving the deal, framing the outcome as a patriotic rescue of TikTok and an act of cooperation by Beijing. The symbolism matters. Despite years of rhetoric, tariffs and sanctions, the US chose to do business with China rather than impose a clean break.
China’s posture in this episode is instructive. During Trump’s first term, Beijing largely avoided direct retaliation, opting instead to address its vulnerabilities by building alternatives and deepening domestic capabilities. Over the past decade, it has constructed entire ecosystems across Electric Vehicles (EVs), renewables, rare earths and hi-tech manufacturing. China has treated technology as an instrument of national power. TikTok became low-hanging fruit in a larger strategic contest, something China could offer without conceding the core of its technological advantage, while gaining leverage in broader trade and diplomatic negotiations.
When New Delhi banned TikTok in 2020, then its largest market with nearly 200 million users, the decision was part of a broader response to geopolitical tensions with China that saw some 200 apps blocked. That ban opened space for domestic platforms, but none have matched TikTok’s scale or global pull.
What emerges from the TikTok settlement is a hard lesson for policymakers. Digital decoupling, once touted as a strategic necessity, has quietly lost credibility among major tech nations. This is the birth of geo-national technology governance, where sovereignty is asserted not through bans alone but through ownership structures, cloud jurisdictions and algorithmic oversight.
Technology sovereignty is no longer a niche regulatory concern but a central pillar of national strategy. China remains deeply embedded in global technology systems and wields leverage far beyond any single platform. For India, a permanent seat at the global technology table can be earned only through scale, interoperability, global adoption and rule-setting power, in emerging tech.
And the rules of the digital economy will increasingly be co-written by states and markets together. In the end, TikTok exposes the defining contradiction of the US–China relationship: Adversaries in posture, frenemies in practice, competing fiercely while renegotiating the terms of their mutual dependence. A bigger worry should be if the TikTok deal is a rehearsal for AI governance.
The writer is a corporate advisor and author of Family and Dhanda
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