TikTok’s Second Act: How Trump, Xi, and Silicon Valley Found Common Ground

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TikTok’s Second Act: How Trump, Xi, and Silicon Valley Found Common Ground

It was the kind of phone call that once seemed impossible. Last month, former U.S. President Donald Trump and Chinese President Xi Jinping spoke and, according to Trump, reached a “tentative agreement” to keep TikTok alive in America. For an app that has sat at the center of years of geopolitical tension, this was a stunning turn.

“I had a great call with President Xi,” Trump told reporters. “He approved the TikTok deal.”

If the deal holds, TikTok’s U.S. operations would be spun out of its Chinese parent, ByteDance, into a new entity majority-owned by American investors. Oracle would lead the consortium, joined by Andreessen Horowitz, Silver Lake, and reportedly, the Murdoch family and tech billionaire Michael Dell. The new company would have a seven-member board — six of them American — and complete control of U.S. user data.

It’s the closest the app has come to escaping Washington’s crosshairs. But it also shows something larger: both Trump and Xi are looking for a way to turn down the temperature after years of economic confrontation — and perhaps score domestic wins in the process.

TikTok’s journey from viral dance videos to a geopolitical bargaining chip has been extraordinary. Launched by ByteDance in 2016, the app surged in popularity during the pandemic, amassing 170 million U.S. users — about half the American population. For many young Americans, it feels as homegrown as Instagram.

But behind the catchy soundtracks and influencer careers lies a deep unease. U.S. lawmakers have long feared that Chinese national security laws could compel ByteDance to share user data with Beijing. That suspicion has fueled years of hearings, executive orders, and even bipartisan legislation forcing TikTok to either divest or shut down its American arm.

Trump himself once led that charge. In 2020, he signed an executive order threatening to ban the app, calling it a “national security threat.” Fast-forward to 2025, and he now touts himself as TikTok’s savior — a pivot that captures both his political instincts and his transactional worldview.

The algorithm at the heart of the fight

At the center of the dispute lies TikTok’s secret weapon: its recommendation algorithm. Unlike traditional social networks, TikTok doesn’t rely on who you follow — it learns what you like, then floods your feed with an endless scroll of perfectly tuned content.

For Washington, that algorithm is both the problem and the prize. Lawmakers see it as a potential conduit for Chinese influence and data collection. Beijing sees it as a core national technology asset — one too valuable to hand over.

Under U.S. law, ByteDance must surrender control of the algorithm for TikTok to remain operational in America. But China’s Ministry of Commerce has drawn a red line: exporting algorithmic technology without approval is off limits.

The compromise now on the table appears to thread the needle. ByteDance would license the algorithm to the U.S. version of TikTok rather than fully transfer it. Oracle, already TikTok’s cloud partner, would help “recreate and retrain” a U.S.-controlled version and store all American user data domestically. ByteDance, the White House insists, would have no access to U.S. user information or algorithmic updates.

Whether that satisfies legal requirements remains uncertain. But politically, it gives both sides a headline win: Trump gets to claim American control, and Xi avoids the optics of surrendering a prized Chinese asset.

The art of the deal, Beijing edition

The negotiations over TikTok are about far more than social media. They come as Washington and Beijing cautiously test ways to stabilize relations after years of tariffs, tech restrictions, and mutual suspicion.

Xi’s approval of the deal — or at least his silence in opposition — suggests Beijing sees TikTok as a useful bargaining chip. Analysts in China note that Xi is eager to reset ties with Washington to ease pressure on exports and secure breathing room for the Chinese economy.

Just before that call, Trump reportedly paused $400 million in military aid to Taiwan — a decision that raised eyebrows in both Washington and Taipei. Whether linked or not, it underscored how intertwined the TikTok talks have become with broader U.S.–China strategy.

For Xi, sacrificing limited control over a consumer app could be a small price to pay for improved trade terms or relaxed tariffs. For Trump, brokering a deal plays perfectly to his “art of the deal” brand — a strongman negotiator cutting through gridlock to “fix” what others couldn’t.

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Trump’s transactional diplomacy

Trump’s approach has always blurred the line between business and statecraft. From NATO funding to semiconductor exports, his foreign policy often follows a simple logic: what can America get in return?

He recently approved the sale of advanced H20 chips to China — but only on the condition that the U.S. government receives a 15% cut of every sale. Critics, including former Vice President Mike Pence, warn that this edges America toward “state-run capitalism.” But for Trump’s base, the message is clear: he’s bringing money home.

The TikTok deal fits that playbook. Trump can tell voters he extracted concessions from China, kept a beloved app alive, and avoided a messy ban that could anger 170 million users — many of them young.

What it means for the U.S.–China balance

The TikTok agreement may mark the first major U.S.–China tech deal since the height of the trade war. But it also sets a template for future negotiations: partial localization, algorithm licensing, and U.S. oversight without full decoupling.

If it works, Chinese companies like Shein or Temu could use similar structures to appease U.S. regulators. If it fails, it will reinforce the belief that no Chinese app can ever safely operate in America.

Either way, it signals that the tech rivalry between Washington and Beijing is evolving. What began as a fight over data is becoming a fight over control — not just who owns the code, but who writes the rules for the next digital era.

Xi, playing the long game, may view TikTok as a small concession in a larger trade reset. Trump, heading into another election season, sees it as proof that only he can strike deals with China.

And for the rest of us? We just want the “For You” page to keep working.

Interested in learning more about TikTok? Check out our previous coverage here:

• The New Battleground of E-Commerce: TikTok’s Trials and Temu’s Rise

• Grab | Sea group | TikTok Shop: A Glimpse into Southeast Asia's Digital Economy

• YouTube's Create app: A TikTok killer in the making?

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We’ll be back in your inbox 2 PM IST next Sunday. Till then, have a productive week!

Peeyush and Mohit

Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual.