The long-awaited deal to save TikTok from being banned from US app stores is ticking down to completion, On The Money has learned.
An investor group working with Vice President JD Vance has the contours of a deal in place to rescue the popular short-video app from extinction, sources close to the situation said.
Vance is Trump’s White House point-man in saving TikTok from a ban that under law is set to go into effect April 5 if the app doesn’t divest from its Chinese ownership over concerns that the ruling communist party uses the platform to spy on US citizens.
The deal announcement will also likely include a grace period of some type – 30 days or possibly longer – for the team to iron out details, the source said.
Under the scenario now being discussed, tech giant Oracle would safeguard the app in its cloud, while TikTok’s Chinese-parent ByteDance would take a minority position in a new US majority-owned company, people with direct knowledge of the dealmaking said.
Large US-based institutions that already have an ownership stake in Bytedance, outfits like General Atlantic and Susquehanna, will form the majority of the ownership team, a move designed to address the US-control stipulations in the law, the sources added.
“We feel good we can get this thing done next week,” said a person with direct knowledge of the negotiations.
A press rep for Vance had no comment. A TikTok spokesman had no comment.
People close to the deal talks caution that the transaction isn’t finalized and could be scuttled or significantly altered. That said, one big hurdle has already been overcome: Tom Cotton, the powerful GOP Senator from Arkansas and a proponent of a TikTok ban, is telling people he will stand down at least for the immediate future and allow the White House to develop a deal structure that complies with ban legislation that he has long favored, people with knowledge of the matter tell On The Money.
The way the TikTok ban law – signed by former President Biden and upheld by the Supreme Court — is written, the company must remove any trace of Chinese control. But the president, in this case Donald Trump, has some discretion in determining if any deal meets those requirements.
Despite the progress, the new US-led investor group and Vance are grappling with the potential massive civil liabilities that under the legislation could be imposed on investors if courts rule that any circumvention violates the law’s provisions to prevent the Chinese from controlling the company in any way, including through its all-important algorithm.
Another unknown is the new company’s valuation. TikTok is a private company, but it’s also enormously popular, with its US app garnering around 170 million users. Deal team members say the new company could be worth anywhere from $20 billion to $40 billion or more.
Still, it’s hard to value given the controversy surrounding the company and charges that it is used as an espionage tool of the communist Chinese government — an accusation that TikTok and ByteDance have long denied.
Another complicating matter is the deal’s current structure that includes TikTok’s current Chinese-made algorithm, the technology that gives the app its secret sauce of providing an endless supply of user videos based on personal preferences, but critics say, is also the tool used by the Chinese government to engage in espionage.
Some of the new equity investors have discussed a White House indemnification over this liability because of the existence of the Chinese algo and its potential legal ramifications. Others say the new ownership team will eventually have to create their own algorithm to stay within the law’s parameters.
On top of everything else, Vance and the new ownership group will need buy-in from the Chinese government, which controls China Inc.
TikTok’s emergence as among the most popular social media platforms, mostly with the youth of America, has been haunting Silicon Valley, Wall Street and Washington for more than five years. Trump once sought to ban the app but did a 180 after the recent election and said he wanted to preserve it.
Trump believes that during the 2024 presidential campaign, enough pro-Trump videos surfaced on the app that it helped him win votes in the 18 to 24 crowd that dominates its user base.
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