Readdressing the TikTok Bargain

Can a divestiture satisfy U.S. national security concerns?

Valuations and proposals to allow TikTok continue operations in the U.S. are underway as the platform undergoes negotiations for an estimated multi-billion-dollar divestiture deal.

After a three-judge panel in the U.S. Court of Appeals handed down a unanimous ruling in December 2024, the court required the social media application to divest from ByteDance or cease operating in the U.S. President Trump granted TikTok the court-provisioned extension in the ruling, allowing the president a discretionary 90-day period for TikTok to continue operating in the U.S. while negotiating a deal.

In the Court of Appeals’ concurring judgment, Chief Judge Srinivasan, Circuit Judge Rao, and Senior Circuit Judge Ginsburg denied TikTok’s petition to protect its First Amendment rights, upholding a 2024 ban signed into law during Biden’s presidential term.

“The First Amendment exists to protect free speech in the United States,” said the ruling, adding, “the government acted solely to protect that freedom from a foreign adversary’s ability to gather data on people in the United States.”

TikTok, a social media company that allows 170 million Americans to create and watch a continuous sequence of short videos overlaid with text, voice-overs and music, was banned by the U.S. government for mining sensitive sensitive data, including private messages, device information, and keystroke patterns.

The Court of Appeals cited prior national security concerns, noting that the Executive Branch had become increasingly worried about the People’s Republic of China’s (PRC) influence over TikTok through ByteDance, which it said maintains ties to the Chinese Communist party. The Executive Branch stated that “foreign adversaries were exploiting vulnerabilities.”

Though President Trump invoked his powers under the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act to ban TikTok in 2020, Biden later withdrew President Trump’s IEEPA executive order and issued a new one, calling the PRC “a foreign adversary” that “continues to threaten national security, foreign policy, and the economy of the United States.”

Amid trade tensions between the U.S. and China, Chinese Premier Li Qiang signaled a desire for stable U.S.-China relations, saying, “they are a married couple who bicker but ultimately need each other.” A mending of fractured U.S.-China relations could not be more timely as private equity firms Silver Lake and Abu Dhabi-based MGX lead TikTok’s divestiture deal, controlling 45% stake, while ByteDance investors’ ownership may drop to an estimated 20-30%.

Oracle, which provides computing services for TikTok, is also one of the investors seeking an equity stake in the divestiture. Under TikTok’s restructuring, Oracle would oversee security operations and continue providing computing services for the platform. However, the concerns that led to President Trump’s initial attempt to ban the video-sharing app, along with Biden’s foreign adversary allegations, go beyond cybersecurity and the protection of American user’s data, as they involve the question of ownership and control.

Whether a simple dilution of ByteDance’s equity stake in TikTok’s divestiture will be enough to safeguard national security and protect the sensitive data of 170 million Americans remains to be seen.

Ibe  Imo (MLA, Journalism ‘25) is a technology leader and founder of  Merie Studios, a digital storytelling platform that leverages investigative journalism to provide expert insights on artificial intelligence, venture capital, and energy. Merie Studios empowers ventures and firms to unlock imagined value. With a team of attorneys and software engineers, Ibe leads research and investigative journalism to spark crucial discussions and uncover insights to transform new ventures and SMEs.