Change of Ownership: The Prelude to the Era of Algorithmic Nationalism and the Rift in the Global Internet
26/01/2026
Last Friday, when over 200 million American TikTok users opened the familiar musical note icon, a pop-up notification announced the end of one era and the beginning of another. Users were asked to agree to a new privacy policy, with the operating entity quietly changed to TikTok USDS Joint Venture LLC. This was not an ordinary terms-of-service update, but the final resolution of years of political struggle, national security anxieties, and geopolitical economic games. TikTok, one of the world's most influential cultural phenomena, has officially transferred control of its U.S. operations to a consortium of American investors including Oracle and Silver Lake Capital. ByteDance retains a 19.9% stake, just below the 20% threshold set by U.S. law.
On the surface, this appears to be a classic American solution: a foreign tech giant perceived as a potential security threat achieves operational localization through a capital restructuring. But lifting this curtain reveals a far more complex picture. This is not merely a change in ownership; it may well signal the dawn of a brand-new, deeply fractured paradigm in global internet governance—the era of algorithmic nationalism has officially begun.
A Politically Driven Capital Restructuring: From the Brink of Ban to a "Trump-Style Deal"
The fate of TikTok in the United States can be described as a political thriller. The plot began during Trump's first term, with the initial threat of a ban citing national security concerns, reaching its climax during Biden's presidency—Congress passed a bill with an overwhelming majority, requiring ByteDance to divest its U.S. operations by January 2025 or face a nationwide ban. However, a dramatic twist occurred after the change in power. Trump, who once championed the ban, signed an executive order on his first day back in the White House in 2025 to suspend the ban and personally pushed for a completely different deal.
Analysis shows that Trump's shift in stance is not accidental. By 2025, TikTok has become deeply embedded in the fabric of American society, particularly as an indispensable cultural infrastructure for Generation Z. Any complete ban would trigger significant economic backlash, affecting millions of content creators and small business owners. Trump astutely recognized this political risk, shifting the narrative from the threat of a ban to saving TikTok from Biden. He personally intervened to facilitate the formation of a acquisition consortium led by his political allies and friendly capital.
The resulting equity structure is highly symbolic: a consortium comprising Oracle, Silver Lake, and the UAE investment entity MGX holds 45%; other investors, including Michael Dell, hold 35%; and ByteDance retains 19.9%. The ingenuity of this arrangement lies in the fact that it formally meets the U.S. legal requirements for severing foreign adversary control, while in substance, it constructs an unprecedented, highly politicized model of transnational technology cooperation.
Vice President J.D. Vance, Treasury Secretary Scott Bessent, and others were deeply involved in the negotiations with the Chinese side. At a crucial meeting held in Madrid last September, Trump even personally pressured the Chinese side over the phone, demanding an agreement before the trip concluded. Under pressure, the deal was finally shaped. This was far from a pure market merger, but a geo-economic transaction directly orchestrated at the highest political level.
Prisoners of the Algorithm: The Struggle for Technological Sovereignty and the Essence of "Licensing, Not Selling"
The most sensitive and core point of contention throughout the entire transaction has always been the secret weapon that made TikTok popular worldwide—the recommendation algorithm. This system completely overturned the logic of traditional social networks, shifting from connecting people to connecting people with content, creating an addictive short video experience. Global tech giants have raced to imitate it, but TikTok's algorithm has always stayed one step ahead.
For China, advanced content recommendation algorithms are regarded as crucial national technological assets. Chinese law explicitly prohibits the export of such technologies without state approval.This means that the traditional path of sale is unfeasible both legally and politically. The solution ultimately found by both parties is a clever licensing model.
According to the agreement, ByteDance remains the intellectual property owner of the core algorithm, but authorizes the newly established U.S. joint venture to use it, and retrains, tests, and updates it based on U.S. user data. The physical carrier of this algorithm will be isolated in Oracle's U.S. cloud environment and disconnected from TikTok's global system.
This creates a fundamental technological paradox: The effectiveness of algorithms relies on being fed massive and diverse data. An algorithm trained solely on U.S. data will be unable to absorb cultural trends and behavioral patterns from other regions of the world in real-time. Forrester analyst Kelsey Chickering points out that this means the information feed for American users will become distinctly American. Global content will still appear, but its ranking weight will change. Will a U.S.-centric recommendation system strengthen user engagement, or will it gradually erode the unique appeal of TikTok as a global cultural crossroads? This remains an unresolved question.
From China's perspective, this represents a formal concession while preserving core interests. Beijing has retained ownership of algorithms as a strategic asset, maintained the ability for algorithmic evolution in other global markets (including its domestic market), and through a 19.9% stake, preserved a share of interests in the United States, the world's largest advertising market. Some analysts speculate that Chinese leaders may use this agreement as a bargaining chip in broader trade negotiations with the Trump administration. In any case, for ByteDance—a giant with net profits exceeding $40 billion, approaching Meta—resolving the longstanding U.S. predicament undoubtedly removes a heavy shackle from its global expansion strategy.
The Crossroads of User Experience: The Specter of Privacy, Censorship, and Political Intervention
For ordinary users and small business owners, the change in ownership immediately brought tangible concerns and changes. The new privacy policy allows TikTok US to collect more precise location information (if users enable location services), track user interactions with AI tools within the app, and permit the use of platform data for off-site advertising. Although these terms are already common in social media, the timing of the changes has still raised concerns among users about diminished control over their data.
The deeper fear lies in content censorship and political interference. Trump has publicly stated that if possible, he would make TikTok 100% MAGA (100% supportive of Making America Great Again). While there is currently no conclusive evidence that the new management is systematically adjusting algorithms to cater to the Republican agenda, user communities have already begun reporting some suspicious signs. For example, some users have reported restrictions on searches for specific keywords such as Minneapolis. This perception-as-reality effect is spreading within the community.
The bias in content moderation will become a significant risk for the new TikTok. Chickering warns: If the moderation mechanism leans toward a certain political viewpoint or fails to curb misinformation, TikTok will face the risk of users migrating to competing platforms. We have already seen such consequences during Twitter's transition to X. For businesses that rely on TikTok for survival, uncertainty is the greatest enemy.
Skip Chapman, co-founder of the New Jersey natural deodorant brand KAFX Body, expressed that his greatest relief is finally no longer having to worry about the threat of TikTok being banned—a shadow that has loomed over his business for over a year, with 80% of its sales coming from TikTok Shop. However, he also cautiously worries whether the new owner might reduce the emphasis on e-commerce operations. Vanessa Barreto, owner of the Mexican restaurant La Vecindad in Las Vegas with over 100,000 followers, admitted that she is in a wait-and-see mindset. Any major transition brings uncertainty, but I won’t act based on fear. TikTok has empowered many voices historically unable to access such platforms, and this influence won’t disappear overnight.
The Fracture of the Global Internet: The Domino Effect of Protocols
The localization solution for TikTok's U.S. operations will not stop at the U.S. border.In fact, it sets a potential precedent for governments worldwide: through political and legislative pressure, multinational technology platforms can be compelled to sovereignly separate their key assets, particularly data and algorithms.
The European Union has long imposed strict regulations on large technology platforms within the framework of digital sovereignty and the Digital Markets Act. The TikTok case may inspire the EU or other economies to consider whether similar data localization and algorithmic isolation requirements could be applied to Google's search algorithms, Meta's social graph, or Amazon's recommendation systems. Although such measures require strong political and economic power as a foundation—currently, perhaps only the United States could fully implement them—their symbolic significance and demonstration effect should not be underestimated.
This points to a troubling future: an increasingly fragmented global internet. Concepts such as information nationalism, digital sovereignty, and algorithmic nationalism will move from academic discussions to policy realities. When every major economy demands the operation of a localized, isolated set of algorithms and data systems, global cultural dialogue, information flow, and commercial innovation will face numerous barriers. The internet's original ideal as a borderless space for connection will give way to the realities of geopolitics.
Especially for Chinese technology companies, TikTok's experience serves as a wake-up call. Their future path of global expansion will inevitably require greater consideration of how to address political demands for localized operations and even the segmentation of technological assets. This will undoubtedly increase the complexity and costs of global operations and may weaken the competitive advantages brought by economies of scale.
Conclusion: A transaction with no losers and a future full of uncertainties.
Looking back at this years-long standoff, the final agreement achieved a peculiar balance. Washington resolved a domestic political dilemma, alleviated concerns within national security agencies, while avoiding the social and economic upheaval that a complete ban would have triggered. Beijing safeguarded its core technological assets and, to the greatest extent possible, preserved its commercial presence and influence in the U.S. market. ByteDance broke free from its strategic deadlock, enabling it to continue its global expansion. American investors gained access to a highly profitable digital platform.
However, this transaction with no losers may potentially make the global internet ecosystem the hidden loser. It officially declares that data and algorithms have become the core battleground for competition among major powers in the 21st century. Technology platforms are no longer merely commercial entities; they are also the frontline for the extension of sovereignty in the digital age.
The divestiture of TikTok's U.S. operations is not the conclusion of an isolated event, but the beginning of a new era. In this era, every video we scroll through is not only determined by our interests but is increasingly shaped by national borders, geopolitics, and state-approved algorithmic logic. As the global digital square is divided by invisible algorithmic walls, what we may lose is precisely the possibility of encountering each other by chance and seeing a broader world. For over 200 million American users and billions of global internet citizens, the real transformation is just beginning to quietly emerge in their information feeds.