ETtech explainer | The TikTok ‘framework’ deal between the US and China

The United States and China have reached a framework agreement over the future of TikTok in the US, just days before the app was due to be banned. US President Donald Trump confirmed the development on his Truth Social platform, announcing that "a deal was also reached on a 'certain' company that young people in our Country very much wanted to save".

The announcement came after US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met with Chinese officials in Madrid. Following the talks, they revealed that both sides had agreed to a "framework for a TikTok deal" that would result in the app's US operations being placed under American control.

What is this deal?


The exact details of the deal remain unknown. Neither government has shared which companies are involved, or whether the US government itself will take a direct stake in TikTok.

Bessent explained that the agreement is between two private parties and clarified that "the commercial terms have been agreed upon".

Bessent stated, “We were very focused on TikTok and making sure that it was a deal that is fair for the Chinese and completely respects US national security concerns, and that’s the deal we reached.”

He also stressed that while the US wants to offer a fair environment for Chinese investment, “US national security comes first”.

Who s the buyer?

While the US has not officially revealed the American buyer, the group expected to lead the deal is widely believed to be headed by Oracle’s executive chairman, Larry Ellison, who recently became the world’s richest person. Ellison is a known Trump supporter, and earlier this year, the US president said he would support the Oracle chairman’s efforts to acquire TikTok’s US business.

What happens to the algorithm?

A key point of concern in previous talks was the fate of TikTok’s recommendation algorithm, considered to be one of the app’s most valuable assets and a major reason for its global success.

According to Wang Jingtao, deputy director of China's Central Cyberspace Affairs Commission, both sides have agreed to authorise "the use of intellectual property rights such as (TikTok's) algorithm", as reported by the news agency AP.

Wang added that a trusted partner will be assigned to manage user data and content security for US users.

Back in 2020, during Trump’s first term, the US tried to force a sale of TikTok’s American operations. In response, China revised its export control regulations to cover technologies such as recommendation algorithms, giving Beijing direct influence over any such transfer.

Extension on TikTok ban deadline

Greer has hinted there may be a short extension beyond the current September 17 deadline, as reported by Reuters, to give both sides time to finalise the deal.

If granted, this would be the fourth time the TikTok ban has been delayed.

It remains unclear how many more times the deadline can be pushed, especially given there is no clear legal framework for these extensions. So far, however, there have been no legal challenges to the delays.

With the deal still unfolding, President Trump and Chinese President Xi Jinping are also set to speak on Friday, to further discuss trade and economic cooperation, according to Reuters.

Trump and TikTok

During his first term as president, Trump pushed to ban TikTok, claiming it was a threat to US national security. However, his executive orders were never enforced, as he lost the 2020 election to Joe Biden.

His stance shifted after returning to office for a second term. On his very first day back, Trump signed an executive order to keep TikTok running on the condition that the United States government would become a half-owner of TikTok's US business.

This framework deal represents a significant step towards easing tensions between the US and China. For now, it also ensures TikTok will remain available to its large American user base.