Despite a law requiring TikTok's complete separation from its Chinese owner ByteDance, the approved deal maintains deep operational and financial ties. ByteDance retains a board seat and leases its core algorithm for royalties, effectively creating a superficial compliance that fails to address the law's original national security concerns.

The creation of a US-controlled joint venture for TikTok mirrors the structure that Western companies historically had to adopt to enter China. This role reversal shows how geopolitical power dynamics are reshaping global tech and business regulations.

Despite a potential US ownership deal, TikTok remains a national security risk because the core algorithm will still be licensed from China. Control over the information flow to Americans is the real issue, not data storage location, making the deal a superficial fix.

The multi-year delay in TikTok's U.S. divestment wasn't just negotiation. It involved the complex technical and logistical challenge of creating a new U.S. entity, migrating data and algorithms to Oracle's oversight, and solving the difficult problem of how to manage content flow with the global version.

To address national security concerns, the plan for TikTok's U.S. entity involves not just data localization but retraining its content algorithm exclusively on U.S. user data. This novel approach aims to create a firewall against potential foreign manipulation of the content feed, going a step beyond simple data storage solutions.

While the joint venture with Oracle ensures US user data is stored locally, ByteDance retains ownership and control of TikTok's powerful recommendation algorithm. The Chinese parent company leases this critical "engine" to the US entity, maintaining operational influence.

The new US-based TikTok entity faces a critical challenge beyond data security: content balkanization. Separating US users from the global content feed could severely diminish the app's value, as international creators are key to the user experience. This logistical problem of cross-border content sharing is a major hurdle.

The TikTok sale provides a blueprint for navigating geopolitical pressure. By selling its US operational assets ("chassis") to local investors but retaining control and licensing its core algorithm ("engine"), the parent company satisfies the text of the law while keeping its most valuable asset.

The forced sale of TikTok to a hand-picked group of political donors at a steep discount is not a genuine national security solution but a form of cronyism. It bypasses a competitive auction, enriches allies, and likely fails to sever the Chinese government's control over the algorithm, achieving the worst of all outcomes.