Next week, the White House is expected to announce a “high level” deal between TikTok’s Chinese parent company, ByteDance, and some group of U.S. investors, to save the app from enforcement of a law, beginning April 5, that bans TikTok in the U.S.. In broad strokes, the deal will reportedly create a new company (“NewCo”) to handle TikTok’s U.S. operations, which will be majority-owned by U.S. investors — but it won’t get rid of ByteDance completely, which might mean it doesn’t satisfy the law.
Some reports have characterized the deal under consideration as a version of Project Texas, ByteDance’s internal name for a set of security protocols it would put in place to keep Americans’ data out of Chinese control. The Biden Administration considered a Project Texas proposal in 2023, but was so unsatisfied with it that they ended up working with Congress to pass a law forcing ByteDance to sell TikTok or see it banned in the United States.
Under binding U.S. law, TikTok should be banned right now. The only reason it isn’t is that President Donald Trump ordered his Department of Justice not to enforce the law until April 5, and asked three of America’s largest tech companies — Apple, Google, and Oracle — to knowingly violate it, on the promise that DOJ wouldn’t prosecute them. All three have done so.
Unless he extends it, Trump’s pause on enforcement of the sell-or-ban law comes to an end next week on April 5. That means we can expect further action from the Trump Administration soon. Whether that action will be legal, however, is another matter. So here are 5 questions we’ll be asking about any deal they announce.
Will The Proposed Deal Sever Operational Links Between TikTok and ByteDance?
U.S. law prevents “NewCo” from operating TikTok in the United States if it maintains “any operational relationship” with ByteDance or any of its subsidiaries. Today, TikTok has an extensive operational relationship with ByteDance: ByteDance controls virtually everything that makes the app run, from its internal databases, documents, and algorithms to its legal and HR departments.
NewCo can’t have any of that overlap, if it intends to comply with the law. But: the President is the one who gets to decide whether an “operational relationship” exists or not. So we’ll be watching to see if Trump actually prevents ByteDance from meddling in TikTok’s operations, or if he just tries to get out of this one by refusing to call a spade a spade.
Does the proposed deal give Trump new power over speech on TikTok?
When ByteDance pitched Project Texas to the Biden Administration, it also offered White House officials extensive control over TikTok U.S., including veto power over the hiring of executives and the ability to block changes to the app’s privacy and content policies — as Forbes first reported in 2023. Under the agreement, White House staff could claim national security as a rationale for blocking changes to the app’s content policies about social issues like abortion, immigration, or the war in Gaza. They could also invoke national security to prevent someone from becoming a TikTok executive.
This raises questions about whether the deal would enable the White House to “jawbone” TikTok, coercing the company into promoting pro-government messages or demoting dissent. Neither the White House nor ByteDance immediately responded to questions from Forbes about whether the deal under current consideration would allow the White House to control content moderation, policymaking, or executive hiring.
What Exactly Will NewCo Control?
The deal under consideration will reportedly create a new entity that will be majority owned by U.S. investors. In the proposed deal with the Biden Administration, there was a new entity too — called TikTok U.S.D.S. — but it only had jurisdiction over a narrow subset of TikTok’s U.S. operations. Will this NewCo have a broader mandate than the last one? Will it control TikTok U.S.’s internal tools? What about its recommendation algorithm?
If NewCo doesn’t control these things — and if ByteDance or a ByteDance subsidiary continues to control any of them — then we are back to Question 1.
Who Has Ultimate Decisionmaking Authority At NewCo?
You’d think the answer to this question would be easy: the US investors who take a majority stake in it! But it’s not always that simple.
When Zhang Yiming founded ByteDance in 2012, he granted himself “supervoting shares” that would allow him to control ByteDance, even if he didn’t continue to own a majority of the company. This is a pretty common maneuver in tech — Meta founder Mark Zuckerberg, former WeWork CEO Adam Neumann and former Uber CEO Travis Kalanick all gave themselves this power too (though it’s noteworthy that only Zuckerberg continues to control his company today).
If the goal of the TikTok deal is to ensure that TikTok is ultimately not controlled by a Chinese person (who could be forced to act on behalf of the Chinese government), then we’ll want to see details on both who owns NewCo and who gets to make decisions for it. If ByteDance is making any of those decisions, then we return to Question 1.
Will The Proposed Deal Obey Chinese Law?
ByteDance can’t sell TikTok’s For You algorithm without the Chinese government’s permission. But if ByteDance doesn’t sell the algorithm, then NewCo can’t (legally) use it. Under U.S. law, NewCo can’t engage in “any cooperation [with ByteDance] with respect to the operation of a content recommendation algorithm.”
The only way NewCo will be able to use the For You algorithm is if the Chinese government lets ByteDance sell. Trump has suggested he might lift tariffs if Beijing approves a sale. But Beijing could also hold permission back, in an effort to draw further concessions from the U.S. President. After all, Trump was so eager to avoid a ban he asked American companies to ignore the law to keep TikTok online. Who knows what else he might concede to get a deal.
