US lawmaker warns TikTok algorithm licensing deal raises concerns

US Representative John Moolenaar, chair of the House Select Committee on China, raised concerns on October 16 about a proposal allowing ByteDance to license TikTok’s algorithm to new US owners as part of a planned sale.

Moolenaar is awaiting a briefing for more details and questioned whether China would retain influence over the technology, citing uncertainty about the algorithm’s contents.

ByteDance, based in China, is required by a 2024 law to sell TikTok’s US assets or face a ban by January 2025.

Former president Donald Trump had signed an executive order on September 25 approving the sale plan, which would give Americans six of seven board seats in the new US entity, with ByteDance holding less than 20%.

The deal also calls for the algorithm to be retrained and monitored by the US company’s security partners, with operational control under the new joint venture.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

China’s export approval could decide TikTok’s future

Any deal depends on China’s Ministry of Commerce, the government agency that oversees trade and export controls.
It must approve a license to transfer TikTok’s algorithm, which China’s export rules classify as restricted technology that needs special permission to move abroad 1.
China’s Commerce Ministry has said it will not back any deal that undercuts its policy principles 2.
That stance adds doubt about approval to license the algorithm to a U.S.-controlled company.
Modern algorithms are the rules that decide what content users see.
AI-based systems change with user behavior, which makes them hard to control or copy.
One expert called that like trying to nail Jell-O to the wall 3.
Without Chinese approval, the 120-day deadline could pass with no fix.
New owners may need to build a new recommendation system, the software that ranks and serves videos, from scratch.

Short-form video rivals face an ad budget opening

If TikTok U.S. operations stumble during the handoff or must train a new algorithm, advertisers may need to shift spend to rival short-form video apps.
Marketing agencies plus advertising technology (adtech) firms can track ad spend share across TikTok, Instagram Reels, and YouTube Shorts.
They should also watch cost-per-thousand-impressions (CPM).
That data can guide when to pitch budget shifts.
Brands that advertise on TikTok should draft backup media plans now.
That helps avoid scrambling during a disruption, when ad inventory (available ad space) on rival platforms may be pricier or scarce.