Thought Leadership
Donald Trump did not manage to secure a deal for Tiktok in 75 days after all. Now the video app is to be given a second reprieve. The legal basis for this is unclear.
President Donald Trump gives Tiktok a further extension in the USA. The short video app is to remain available in the country for a further 75 days, despite a US law to shut it down, Trump ordered.
According to the law, Tiktok should have been sold by its Chinese-based owner Bytedance by January 19 – or shut down in the US. However, Trump granted a grace period of 75 days when he took office in January, which expires on April 5. Politicians and experts in the US fear that the Chinese government could use Tiktok to spy on Americans or manipulate public opinion. The companies reject this.
However, Trump also repeatedly held out the prospect of extending the deadline if necessary – although there is no basis for this in the law. However, even the first 75 days were not covered by the document: it only provided for a postponement of 90 days in the event that sales negotiations were going well.
Trump and Vice President JD Vance had raised expectations in recent days that a solution for Tiktok could be reached in principle before the deadline on Saturday. However, Trump has now written on his online platform Truth Social that the deal needs more work to obtain all the necessary approvals.
Package solution with customs duties?
Trump had already held out the prospect of lower additional tariffs for China in exchange for the Chinese government’s approval of the Tiktok sale. He conceded that Beijing would “possibly” have a say in the deal. “Maybe I’ll give them a small reduction in tariffs or something like that to be able to close the deal,” Trump said recently. Every percentage point of tariffs is worth more than the short video platform. Now Trump has again pointed out that China is “not happy” about his additional tariffs.
Outlines of the deal already in media reports
Over the past few days, media reports have stated that, according to Trump’s plan, the US business would be spun off into a new company called Tiktok America. The software group Oracle and the financial firms Blackstone and Andreessen Horowitz are leading the race for the leading role in a US Tiktok. The new investors will receive around half of the American app operator, according to reports citing informed persons. Existing international investors are expected to hold around 30 percent – leaving Bytedance with just under 20 percent. This would just about fulfill the requirements of the law.
Algorithm as the bone of contention
According to media reports, the existing Tiktok algorithm will continue to be used as the software that decides which videos users will see next. Tiktok America would take out a license for this.
This part of the plan is likely to cause headwinds in the US. Tiktok critics warn that the Chinese government could use the algorithm to influence public opinion in the US. Tiktok and Bytedance have always rejected this. Meanwhile, the law stipulates that neither the Chinese government nor Bytedance may have control over the algorithm.
Bytedance and Tiktok have long said that it would be impossible to sell just the US part of the app because this would fragment the platform. Trump recently said that there were “different ways to buy Tiktok” – and that they would find the one that was best for the US. It remains unclear how China and Bytedance feel about the proposed deal.
China decides on an algorithm sale
In his first term in office, Trump wanted to force the sale of Tiktok’s US business by threatening to ban it, but was stopped by US courts. The law passed under President Joe Biden provides a solid legal basis for Tiktok to go out of business in the US – but Trump warmed to the app during the last election campaign and wants to keep it.
Meanwhile, China established the rule during Trump’s first term of office that the government’s approval is required for the sale of software algorithms abroad.
dpa
