TikTok's Profit Puzzle: Who Really Benefits?

TikTok's future in the US is taking shape, but the details reveal a complex profit-sharing arrangement. ByteDance, the Chinese parent company, stands to gain a significant portion of the profits from TikTok's US operations, despite not owning a majority stake. This is all part of a deal that aims to address US concerns over data privacy and national security. The deal values TikTok's US operations at $14 billion. New investors, including Oracle, Silver Lake, and Abu Dhabi's MGX, will take a combined 45% stake. Existing and new American investors will hold 35%, while ByteDance is limited to 19. 9% due to US laws. However, the real money might come from licensing the app's powerful algorithm and other profit-sharing agreements, which could give ByteDance up to 50% or more of the profits. This deal is still a work in progress, and changes are possible. The Trump administration has given a 120-day window to finalize the details. Meanwhile, some experts are questioning whether this deal truly addresses national security concerns. They point out that the algorithm, which is crucial to TikTok's success, will still be controlled by ByteDance. The Chinese government has not explicitly approved the deal, but it has expressed pleasure in seeing companies reach solutions that balance interests. The US Congress had previously mandated that ByteDance divest its US operations, so this deal is a step towards meeting that requirement. However, some lawmakers are calling for more oversight to ensure that ByteDance and the new TikTok entity do not cooperate on the algorithm or have operational ties. In the end, this deal might be more about short-term optics than long-term security. While it creates a majority American-owned entity, it also allows ByteDance to continue benefiting from TikTok's success in the US. It's a complex puzzle with many pieces still to be revealed.