TikTok’s Deal and Lessons for Chinese Companies to Navigate Anti-globalization

Donald Trump’s second election as U.S. president has heralded the end of global free trade and the primacy of the market economy. Gone are the “world is flat” times of Friedman’s famous 2005 treatise, as the world is buffeted by the “high tariff” weaponization of trade implemented by U.S. administration threat in August 2025. In a form of flattery, the US under Trump appears to be plagiarising China’s strategy of inviting investment by making its market harder to access. However, unlike China, the U.S. has no low-cost manufacturing advantage and—despite its large domestic market—cannot match China’s stable business environment that investors seek.

As global trade patterns undergo a historic restructuring, Chinese multinationals must adapt quickly. Social media platform TikTok’s trials and tribulations in the U.S. provide a textbook case. Its proposed corporate spinoff and organizational realignment illustrate how firms can mitigate geopolitical risks amid the anti-globalization tide. At the heard of this battle lie two forces: global supply chain decoupling and digital sovereignty. Although TikTok’s parent company ByteDance has a solidly divested equity structure (21% held by Zhang Yiming, 21% by staff and 58% by participants in U.S. capital markets), the U.S. administration still requires it to divest core assets on the grounds of “national security”.

During U.S. congressional hearings, TikTok’s CEO Shou Zi Chew demonstrated the structural dilemmas global companies face under politicized scrutiny. Lawmakers focused on the control of the platform’s algorithms and flow of data, querying whether it was subject to Chinese law. While Chew replied that “data stored on Oracle servers cannot be accessed by the Chinese authorities,” concerns that TikTok was a figurehead for China’s “digital expansion” could not be appeased. U.S. anxiety about the loss of its technological advantages and the systemic challenges posed by the “China model” were transparent.

According to foreign media reports, the Trump administration pushed for a new entity—“TikTok U.S.A.”—requiring ByteDance to hold less than 20% of its shares and U.S. firms like Oracle to serve as technology overseers. This move satisfies the U.S. Data Security Act’s limits on foreign control while allowing TikTok to continue renting ByteDance’s algorithms to remain competitive.

The establishment of an independent board of directors—potentially including U.S. representatives such as Walmart’s CEO—could reduce geopolitical interference in daily operations. Sensitive decisions on content review and data governance could then follow U.S. law rather than directives from Beijing, reducing exposure to “long-arm jurisdiction.” This structure could appease U.S. regulators while preserving ByteDance’s long-term commercial interests.

Algorithm Rental: Preserving Technological Sovereignty

A horizontal split need not sever TikTok from Bytedance’s technological core. Instead, TikTok could continue to rent ByteDance’s algorithms under strict limits on its use and data retention. As a “technical gatekeeper”, Oracle would not only be asked to meet the U.S.’s requirements for localized data storage, but would also be mandated to avoid the transfer of core technology. This “use but not own” model provides a pragmatic compromise in the Sino-U.S. technological cold war. They would avoid the crippling cost of full decoupling, while protecting Chinese firms’ intellectual property advantages.

A Dual-Control Model: China for Douyin, the U.S. for TikTok?

ByteDance’s equity is relatively dispersed: founder Zhang Yiming holds about 21%, employees 21%, and global institutional investors (such as BlackRock, General Atlantic, SIG) around 58%. This raises the question: Could Doyin remain China-controlled while TikTok shifts under U.S. majority control?

TikTok still struggles to fully convince critics on data protection. Although TikTok says it has isolated U.S. data, reports suggest some data flows may still be accessible to its Chinese parent company, ByteDance.

A horizontal split could enable TikTok to mitigate geopolitical risks. By spinning off its U.S. business into a separately listed U.S. company and paying Douyin for access to its algorithm IP, TikTok could fully realize its global value while easing U.S. security fears. In this way, ByteDance’s twin platforms—Douyin and TikTok—could avoid being perpetual hostages of the Sino-U.S. trade war.

The end of frictionless access to U.S. markets has forced Chinese companies to redefine their survival strategies. TikTok’s split plan is not just a stopgap but a blueprint for the future. Under China’s “dual circulation” strategy, firms must anchor themselves in technological sovereignty while relying on organizational flexibility to expand abroad. In the new era of fragmented globalization, the winners will be those who can balance national imperatives with global market share—shaping the rules rather than being bound by them.

The original article was in Chinese, published on FT Chinese.