Framework Deal Reached for TikTok U.S. Ownership Amid US-China Trade Discussions

U.S. and China Reach Framework Agreement on TikTok Ownership

U.S. Treasury Secretary Scott Bessent announced a framework deal for TikTok during US-China trade talks in Madrid on Monday, September 15, 2025. The agreement aims to facilitate the transfer of TikTok's U.S. operations to American-controlled ownership from its Chinese parent company, ByteDance, addressing long-standing national security concerns in Washington. This development sets the stage for a potential finalization between U.S. President Donald Trump and Chinese President Xi Jinping, who are scheduled to speak on Friday, September 19. The resolution of TikTok's ownership has significant implications for the social media sector and the broader geopolitical landscape.

A Complex Restructuring: Details of the TikTok Divestment

Under the terms of the framework agreement, TikTok's U.S. operations are slated to be spun off from ByteDance. An initial agreement would see ByteDance's stake in TikTok fall below 20%, aligning with a 2024 U.S. law that mandated divestment or a ban in the American market. New outside investors are expected to acquire 50% of TikTok's U.S. business, while existing U.S. investors would hold approximately 30%. The U.S. operations have been valued at an estimated $35 billion to $40 billion.

A consortium involving Oracle Corp., venture capital firm Andreessen Horowitz, and private equity firm Silver Lake Management LLC is set to play a pivotal role in this ownership transfer. Oracle, which already provides cloud services for TikTok as part of its "Project Texas" initiative, saw its shares rise as much as 5.9% on Tuesday following the news, reflecting investor confidence in its continued involvement. The framework also includes a provision for ByteDance to license TikTok's recommendation algorithms to the new U.S. entity, a critical component given the 2024 law's stipulation that ByteDance cannot have any operational role with the algorithm post-sale. U.S. Trade Representative Jamieson Greer confirmed the agreement, noting that commercial terms, agreed upon by private parties, would not be disclosed, a point reiterated by Secretary Bessent. Chinese International Trade Representative Li Chenggang acknowledged a "basic framework consensus" to resolve TikTok issues cooperatively, emphasizing methods like "entrusted operation of TikTok's US user data and content security business as well as the licensed use of algorithm and other intellectual property right."

Market Reacts to Evolving Social Media Landscape

The news of the TikTok framework deal spurred positive movement across the social media sector, with investors anticipating a potential redistribution of digital advertising market share. Meta Platforms (META) shares advanced 1.2% on Tuesday, closing near $764.70, as optimism over the deal fueled interest in the sector. Snap (SNAP) gained 2.3%, while Pinterest (PINS) and Reddit (RDDT) also traded higher. Analysts suggest that if TikTok is acquired by a buyer lacking advanced advertising capabilities, platforms like Meta and Snap could capture incremental ad spending, although competitive pressures could intensify if a stronger player with e-commerce or AI expertise steps in.

Beyond the social media specific impacts, the broader market responded positively to the de-escalation of a key US-China trade tension point. U.S. stock futures surged, with the Dow Jones gaining 144 points and the Nasdaq rising 172 points, fueled by optimism for a trade deal and an overnight Federal Reserve rate cut. Asian markets also reacted favorably, with the Nikkei 225 rallying 1.34% in morning trading.

Broader Geopolitical Context and Investment Implications

This framework deal is a pragmatic step in managing the intricate US-China trade relationship, potentially de-escalating a significant point of contention. It underscores the increasing geopolitical risks and regulatory scrutiny faced by global technology companies, particularly those with cross-border ownership structures. The resolution reduces uncertainty for investors regarding TikTok's operational future in the U.S., a market that generated approximately $10 billion in revenue for TikTok in 2024 and is particularly profitable. ByteDance, TikTok's parent company, is valued at approximately $300 billion, with a substantial portion tied to TikTok's U.S. performance.

The event also aligns with the Trump administration's "America First Investment Policy," which aims to reshape foreign direct investment. This policy outlines heightened scrutiny for investors from "foreign adversary" countries, particularly China, restricting investments in U.S. technology, critical infrastructure, and other strategic sectors. This has already led to a significant decrease in Chinese Foreign Direct Investment (FDI) in the U.S., from a high of $46 billion in 2016 to under $4 billion in 2024. The TikTok resolution, therefore, sets an important precedent for how governments might intervene in the ownership and operation of popular digital platforms due to national security concerns, potentially influencing future cross-border tech investments and corporate strategies.

Looking Ahead: Final Steps and Lingering Uncertainties

The immediate focus now shifts to the scheduled call between President Trump and President Xi Jinping on Friday, September 19, where the final details of the TikTok deal are expected to be discussed. A potential 90-day extension of the September 17 deadline for TikTok's divestment was also mentioned, allowing for the comprehensive finalization of the agreement.

While the framework provides a clearer path forward, uncertainties remain regarding the precise commercial terms, the final ownership structure, and the extent of involvement from Chinese firms, including ByteDance, particularly concerning the control of TikTok's powerful recommendation algorithm. Furthermore, ongoing broader U.S.-China trade issues, including tariffs and technology export controls, remain part of the wider discussions, suggesting that while the TikTok issue may be nearing resolution, the complex economic and geopolitical dynamics between the two nations will continue to evolve. Regulatory risks, including potential restrictions from Chinese regulators, also persist and could influence the deal's ultimate outcome.