TikTok has long been at the center of a global debate over data, national security, and cultural influence. With 170 million U.S. users, the app is an incredibly influential digital space as a critical intersection for consumers, creators, advertisers, and companies to interact. TikTok, owned by Chinese company ByteDance, has been under intense scrutiny over how it handles U.S. user data. Recently, the Trump administration announced a framework deal with China aimed at keeping TikTok in the U.S. by restructuring ownership and data handling. While details remain under negotiation, this could impact the future of foreign owned apps operating within the US.
Legal and Statutory Framework
The Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA) requires apps owned by foreign adversaries to give up the parts of a company that operate in the U.S or, face bans. Earlier this year, the Supreme Court upheld the consequences of this law against TikTok, giving the federal government strong authority to enforce divestments and bans. The framework deal aims to resolve this by shifting TikTok’s U.S. operations into a new ownership structure, with American oversight of data security and algorithm use.
While final terms are still in flux, the framework reportedly includes:
- S. ownership of TikTok’s American business: details on which company or consortium will take control are still developing.
- Algorithm licensing: ByteDance may license its algorithm rather than sell it outright, raising questions about long-term control.
- Data safeguards:S. user data would be stored and monitored domestically, under heightened government oversight.
Implications for Industry and Creators
While the deal between the U.S and TikTok can provide stability under the guise of avoiding a full ban, there are implications for creators, advertisers, and entertainment companies alike. Any changes to the algorithm or data practices could affect reach, monetization, and brand partnerships. Additionally, brands that have shifted large portions of their advertising budgets to TikTok need clarity on whether audience growth and engagement will remain steady. However, competitors like Meta and YouTube may benefit from uncertainty, driving traffic to their respective platforms.
Legal, Constitutional, and Privacy Concerns
At the heart of TikTok’s success is its recommendation algorithm. If ByteDance only licenses the algorithm rather than transferring ownership, there could be some uncertainty. Questions surrounding 1) who controls updates to the algorithm and 2) whether the U.S. independently audit or adjust its function remain at the forefront of the conversation. Additional questions about China revoking or restricting the license if political tensions rise also remain unclear. For content creators, entertainment and advertising businesses, this can impact licensing structures, leaving businesses vulnerable if intellectual property is not fully transferred.
It is clear the deal aims to transfer user data, from U.S users, domestically. Uncertainty remains regarding the mechanisms for compliance monitoring and whether oversight will be exercised by third-party contractors or government agencies. There are also growing concerns about data transparency between consumers and TikTok, even more so with the U.S aiming to oversee U.S consumer data. Nevertheless, entertainment companies and advertisers who rely heavily on TikTok should track these developments closely. New compliance requirements may affect advertising contracts, influencer deals, and user trust.
Some critics argue that restricting or restructuring TikTok risks crossing into censorship. If the government dictates how content algorithms operate, does this implicate free speech rights? Courts may eventually need to address whether laws like PAFACA unduly restrict digital expression.
Conclusion
The deal presents both opportunity and risk; its success depends on specifics of ownership, algorithm control, and ensuring legal compliance. Key considerations such as disclosure of deal terms, congressional oversight, and involvement of regulatory agencies should be made clear. The upcoming call between President Trump and President Xi Jinping might finalize or change the framework, but hopefully will provide much needed clarity on how this will affect TikTok operations within the U.S.
For content creators, entertainment companies, and advertisers, ensuring contract clauses that protect data rights, monitoring how algorithmic or IP licensing is handled, and staying informed of regulatory changes are best practices to navigate the changing landscape.
This kind of deal could become a model for how foreign-owned platforms are regulated globally, especially in balancing innovation, free expression, and national security.
Contributions to this blog by Anastasia Pedraza.