TikTok’s U.S. Algorithm to Be ‘Controlled By America’ in Imminent Deal: White House

(ROBYN BECK/AFP via Getty Images)

White House Press Secretary Karoline Leavitt in a Saturday appearance on Fox News offered details of a deal to bifurcate the Chinese viral social media app TikTok into U.S. and international versions. Most importantly, she said that the crown-jewel of the app—the recommendation engine that picks the next video users see—will be “controlled by America.”

“We are 100% confident that a deal is done. Now that deal just needs to be signed,” Leavitt said. “And the President’s team is working with their Chinese counterparts to do just that.” Leavitt said that she expected a signed deal in “the coming days.”

Leavitt reported other important details: The U.S. TikTok app will have a majority of shares owned by Americans, and Americans will fill out six of seven seats on the board. Oracle, she said, will supply cloud services in the U.S.—something it provides for the current iteration of TikTok that’s available.

TikTok’s parent company ByteDance, China’s Commerce Ministry, and the Chinese embassy in the U.S. did not respond immediately to a request for comment.

President Donald Trump’s spoke in a Friday phone call with Chinese President Xi Jinping. After the call wrapped, Chinese Foreign Ministry did not mention a completed TikTok deal in its readout.

“China’s position on the TikTok issue is clear,” it read. “The Chinese government respects the wishes of the company in question, and would be happy to see productive commercial negotiations in keeping with market rules lead to a solution that complies with China’s laws and regulations and takes into account the interests of both sides.”

TikTok stands out in a crowded field, because of its best-in-class recommendation engine that picks the next video users will see. It has an uncanny ability to show people what they will like, and it is the secret sauce behind TikTok’s global success.

For a U.S. TikTok to have a meaningful chance to succeed, the deal must come with some sort of access to the engine which is not under the control of ByteDance. Any deal without it may doom the U.S. TikTok to irrelevance in the long term.

Write to Adam Levine at adam.levine@barrons.com