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Last Friday, President Donald Trump announced that his Chinese counterpart Shi Jinping, had tentatively approved a deal to save TikTok in the US.

I had a great goal with President Jay and as you know, he approved the TikTok deal and we're in the process with.

Under the proposed agreement, TikTok's US operations would be separated from its Chinese parent company byt Edance, and a group of new US backers would own a majority stake in the company.

This deal is part of a broader push to put the Trump trade war behind them to re engage with the US administration.

Mark Anderson is a Bloomberg Asia Tech editor based in Hong Kong.

The very fact these two men were speaking was very significant.

Of course, the relations between China and the US are at one of their lowest points for you years, and both leaders are really looking to ratchet down the tension and move on to the next chapter.

On Friday, China's Foreign Ministry stops short of saying that Beijing had given its final blessing and urged fair treatment of Chinese interests.

Is the toy for of the Chinese statements.

Well, I think I think so.

I mean when you say fully aproved, I don't know what that means.

We have to get we have to get it signed.

I guess most China analysts will tell you that when she goes to those meetings, he sees it as sort of a bow tying moment.

All the work has been done and he is there to bless things.

Josh Wingrove is Bloomberg's senior White House correspondent.

He's been covering the fight over TikTok since twenty twenty, when then President Trump signed an executive order calling for its parent company to divest its ownership or face a man in the US.

Trump doesn't work that way, right.

Trump wants to get in it and pass it a deal himself and leave the fine prend to tomorrow or to others.

And so that has been just sort of like an up is down, down is up, diametrically a toast approach between the two countries.

Right now, This is the big take Asia from Bloomberg News.

I'm wanha.

Every week we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever shifting region.

Today on the show, we're diving into the TikTok deal between the US and China, what it means for American users, and who gained the upper hand at the negotiating table.

The battle over TikTok's fate in the US has been brewing for years.

The app is owned by a Chinese corporation and exploded in popularity with American users back in twenty twenty, during the early days of the COVID pandemic.

Up heart, Hey, everybody, welcome to my TikTok page.

Okay, then what down should I try first?

I love to take.

Since then, TikTok has experienced the type of growth most tech companies can only dream of.

It has more than one hundred and seventy million users in the US alone, that's half of the population, and its parent company, by Dance, is valued at more than four hundred billion dollars, making it the most valuable private business in China.

Now.

To US based.

Users, the app feels so American.

It's widely popular with gen zs, and it created a new class of entrepreneurs influencers who've turned their Internet hustles into full time careers.

Here's how much I made it off of social media as a college student who has twenty thousand dollars on TikTok.

If you want to go viral here on tech talk, you're going to do these four things.

But the app is very much not American, and Bloomberg's Asia Tech editor Mark Anderson says that's a big part of the problems.

Have long been concerned that TikTok could be used to spy on American citizens.

This stems from the fact that China requires its companies to share national security data with its government, so US officials are worried that China's government could abuse the data of US TikTok users.

You know, they could collect dossia's a personal information, they could blackmail them, they could exploit content preferences.

And a lot of concern about political interference during the action.

Season, especially in US elections.

Yes, critically, in the twenty twenty US election, TikTok was a very powerful platform.

It's worth noting that Donald Trump personally benefited from this, and there have been studies that have shown that his ticket was boosted by TikTok, so I think for him it's a personal issue.

I've had more people say, could you try and keep TikTok alive?

I use TikTok.

I mean I have to admit it in the election, and look how I did with you.

No Republicans come alone today.

President Trump is a TikTok advocate, but in his first term he pushed for a ban, calling the app a threat to national security.

That sentiment was echoed by President Biden, who signed a law requiring Byteedance to either Celtic Talk or discontinue service in the US.

The Supreme Court upheld that ban and put the fate of the app back in Trump's hands.

President Trump has been deferring enforcement of that law by executive action, and no one really seems spun up about it.

But it also does not seem clear that he has iron cloud legal authority to do it.

Bloomberg's Josh Wingrove and Mark Anderson say what's become clear in recent months is that Presidents Trump and she are looking for a solution for TikTok and for opportunities to ease tensions between the two countries.

The drama over trump Tariff's reaching up to one hundred and forty five percent is still very fresh in the mind for Sijenping, who's very much trying to change the relationship in a way that benefits Beijing and possibly divest TikTok at a crucial moment that helps him navigate the next chapter in an advantageous way and secure better terms for Chinese exports to the US.

What do we know about the agreements that were reached on TikTok so far?

What we know about the deal so far is that Oracle, the software giant, will take a major role in leading a consortium that will also include Anderson Horovitz and silver Lake Management.

They will have an eighty percent or more ownership stake in TikTok us as required by a law that was passed last year in the United States.

By dance, the owner of TikTok at the moment must reduce its stake to twenty percent or less.

On top of that, the White House says this new US only TikTok will be controlled by a board with seven members, six of whom will be American.

In an interview with Fox News, Trump suggested that Michael Dell and the family behind Fox, specifically Lachlan Murdoch and his father Rupert, may also be involved in the TikTok takeover.

I hate to tell you this, but a man named Lachlan is involved.

You know, Lachlan is It's a very unusual name, Lachlan.

Murdoch, mister murder, I believe, and you call him and Rupert is.

Probably going to be in the group.

I think they're going to be.

Then there's the platform itself.

While it's not clear yet whether users will have to download a new app or update their existing one, Mark says TikTok will create a new platform for users in the US.

The deal will create a new entity, a new app that users will migrate to, and it will recreate the algorithm.

So I think the new owners are hoping for as little disruption as possible to the user experience that these one hundred and seventy million people know and love.

And of course the algorithm has been such a huge point of contention.

Right, this is what is used by TikTok to suggest stories, suggest reels for people to right.

The algorithm is a key sticking point for this deal.

The US law that was passed in twenty twenty four says by Dance must give up complete control of the algorithm and the technology that supports the algorithm if it's going to keep TikTok alive in the country.

But from the very beginning of these talks about deal, and as recently as a few weeks ago, the Chinese government has set it refuses to do that.

Most social networking platforms rely on users to share content with each other.

What TikTok did that's so revolutionary is they created a way for the app itself to suggest content to users through their recent activity and their declared interests.

So it really allows people to interact with a platform completely on their own, without any friends in the real world.

A Beijing official said that my Dance has agreed to license its algorithm to the new US version of the TikTok app, but that's not giving up complete control.

She and Trump may decide that's good enough, it may not comply with US law.

Under the proposed deal, TikTok's US owners would lease a copy of byte Dance's algorithm, and Oracle would help recreate and retrain it from the ground up.

Oracle would also provide security for the algorithm and store data from US users in a secure cloud.

The White House says Byteedance will not have control over or access to any information or algorithm in the US.

So basically what they're trying to do is ensure that American buyers actually do control the recommendation software behind TikTok and the US And this gets to a key concern by US lawmakers over the past few years, really, which is that Chinese companies are mandated by law to share user data with the Chinese government.

Coming up, what this means for US China relations and who gained the upper hand at the negotiating table.

There was a lot at stake for both the US and China in the negotiations over TikTok.

Mark Anderson says it's a toss up who came out on top.

I think you could say it's a win win.

The US gets a key concession from China that it's been seeking for years, and China, within the broader context of tariffs, geopolitical tensions, and the Ai race, Beijing might start to see TikTok as a bargaining chip to get a better deal in other, possibly more critical areas.

Remember, Beijing and Washington are due to resume trade talks, and there are many other issues on the table that both sides need to hammer out, fentanyl, nuclear proliferation, access to AI technology.

These are just a few of the bigger issues on display here, But.

Bloomberg's whine House correspondent josh Win Grove says TikTok and the national security alarms it raises seems to be a bigger concerned to Washington in Beijing.

I think both sides think they have leverage, but it sure seems like the Chinese certainly do, if only because Trump is backing off what had been a position of his and we're seeing China able to squeeze in key sectors in a way that is alarming the US.

Now that might be a wake up call for both parties.

I should know some of these issues were simmering under the Piden administration, but it's pretty clear that China realizes what the pressure coins are and is willing to press on them if needed.

And President Trump, chiefly through tariffs, but not just through tariffs, through export controls and otherwise also is doing that.

And that is I think the tension right now, in particular in the Republican Party is like how far is too far and how much deal making is okay.

Trump's heading into a midterm election does not want tariffs showing up on everyone's receipts left, right, and center.

So right now the bar to make a deal with Trump seems to be shifting, and Koreau have made deals UK China seems to be really driving towards one or at least driving towards some sort of medium term certainty.

Using TikTok almost as like a then edge of the wedge to get people to the table.

But the jury is very much out and no one knows where it's going to land.

With China, most of the details of the TikTok deal have come from the US, China has been largely silent.

Still, Mark says it's a positive sign, an indication that the two superpowers are willing to sit down and talk business.

According to Trump, Chinese President's Jen Ping has approved the deal, but so far Beijing has only really issued broad statements without directly referring to any deal, saying it respects the wishes of the company and is glad to see business negotiations in line with market rules, just very general language that doesn't indicate any kind of imminent signing of a deal.

However, they were very positive about the fact that Trump and she were talking.

They called the phone call a pragmatic, positive and constructive talks.

So I think that sort of indicates the general feeling in Beijing, which is that this deal is part of a broader push to move closer to the US to put the Trump trade war behind them Mark.

Just before the phone call took place last week, Trump reportedly halted more than four hundred million dollars in military aid to Taiwan.

That's according to the Washington Post.

Now we don't know if that move is connected to the TikTok deal, but still that's a significant development on its own.

How are people reading that?

I think it's part of Trump's transactional diplomacy.

We've seen it in Europe with NATO, But of course it serves his purposes of appeasing a key Chinese demand as the.

Talks for this TikTok deal are taking place.

So I would view it as possibly part of Trump's art of the deal and also part of his transactional diplomacy where he expects even the most key US allies to pay their own way on defense.

We know that Beijing views Taiwan as an inseparable part of its Chinese territory and US officials have said that she wants the Chinese military to be ready to invade Taiwan by twenty twenty seven if the US support for Taiwan is now on the table, and that's obviously a big if, that would be a huge win for China.

Yeah, the US is by far Taiwan's most important for an ally, and I think Taiwan has been reading the writing on the wall and it's been ramping up its own defense commitments in part to play k Trump and his transactional approach to their relationship.

Taiwan's president has announced plans to increase military spending and approve special funding to acquire more drones and ships.

So I think those are the kinds of overtures that Trump wants to see from Taiwan right now.

He wants to see them taking defense into their own hands and maybe not relying on the US as much as they used to.

He wants to be seen as a harder sell.

He wants to negotiate and get better deals for the US by posture and making countries think twice before counting on support from Washington.

Mark, this deal strikes me as very much of a Trump deal right and art of the deal agreement.

But it doesn't seem as if people are really up in arms about that that it's so transactional with everything on the table up for negotiations.

Let's not forget that Trump is a master at messaging, and I think the messaging here is very good for the people he cares about the most in the US, which are of course his voters in his bass.

He can say I went to China, I went to President chigen Ping, and I extracted a deal that couldn't have been struck under Joe Biden.

I was able to get them to concede on a number of critical points.

I was able to get the algorithm essentially copy and pasted, and now under American ownership, I was able to get six out of seven seats on.

The board for Americans.

I think for him it looks really good, and I think he knows what he's doing when it comes to selling this deal to Americans and to his base.

How does it then make she look?

For me?

I think it makes she look like he's more concerned with the next ten years than the next six months.

He's playing a very long game here.

He senses an opportunity with Trump, like many other leaders, I think he sees this transactional, very short term focused American president.

How many of those do you get in your lifetime?

So I think for him, maybe TikTok was the price to pay for a better tariff deal, or a better deal on rare earth magnets, better deal on access to Boeing airplanes.

These are the more important issues to the Chinese government.

But Josh says whether the TikTok deal could serve as a blueprint for how Chinese companies might strike future deals with Washington remains to be seen.

I think it's unclear right now.

For instance, Trump hasn't watered down restrictions on Chinese electric vehicles that carry similar national security risks to a lot of folks.

But it does seem like everything sort of on the table right.

One thing we've also seen is on semiconductor chips, this real transactionality, right, Trump allowing the age twenty chip to be sold to China, but only so long as the US government gets a fifteen percent cut of each of those sales.

So like the Hawk view is sort of shifting a little bit, it seems in Washington right now, where there's certain things aren't budgeting, like cars, farmland, whereas other things maybe are more up for negotiation than we knew.

And so I think basically as all things with Trump, you know, anything can be a negotiation at the right price.

It is consistent that Trump sees like revenue sources potentially for the US government in this but of course has been criticized by Vice President Mike Pence is former Vice president and others, not just Democrats.

But this is pushing the US government too much into the realm of private business, and that we're really sort of headed to like a state run model in certain key sectors now more than that it has been palatable for Republicans in the past.

This is The Big Take Asia from Bloomberg News.

I'm wanh to get more from The Big Take and unlimited access to all of Bloomberg dot Com.

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