What's Happening?
Treasury Secretary Scott Bessent has announced that the TikTok deal, which has been under negotiation for some time, is set to be finalized on Thursday. This announcement comes as President Trump is scheduled to meet with Chinese President Xi Jinping
at the Asia Pacific Economic Cooperation summit in South Korea. The deal involves a 'qualified divestiture' of TikTok's U.S. operations to American investors, satisfying a law passed by Congress in April 2024. This law required TikTok's China-based parent company to divest or face a ban. The agreement aims to address national security concerns by ensuring TikTok's operations in the U.S. are under American control. The deal has been delayed multiple times but is now reportedly ready to be announced following successful trade negotiations in Malaysia.
Why It's Important?
The finalization of the TikTok deal is significant as it addresses ongoing national security concerns related to the app's Chinese ownership. By transferring TikTok's U.S. operations to American investors, the deal aims to mitigate risks associated with data privacy and potential influence from the Chinese government. This move is expected to have a substantial impact on U.S.-China relations, as it represents a collaborative effort to resolve a contentious issue. Additionally, the deal could influence the operations of other foreign-owned tech companies in the U.S., setting a precedent for how such matters are handled in the future.
What's Next?
Following the finalization of the TikTok deal, President Trump and Chinese President Xi Jinping are expected to officially announce the agreement during their meeting in South Korea. The deal will establish a U.S.-based joint venture with a majority of American investors and a board of directors primarily composed of Americans. ByteDance and its affiliates will own less than 20% of the new entity. The involvement of major American companies like Oracle in the deal highlights the strategic importance of securing TikTok's operations under U.S. control. The announcement is likely to prompt reactions from various stakeholders, including lawmakers and industry leaders, who have been closely monitoring the situation.
