After launching the international version of TikTok in 2016, ByteDance quickly took the global market by storm, amassing a massive user base in a short period. In November 2017, ByteDance acquired the rapidly growing North American short video platform Musical.ly for $1 billion and later merged it into TikTok, further solidifying its user base and market penetration in the U.S. However, as TikTok's influence continued to grow, the associated risks gradually shifted from purely commercial competition to more complex political and national security concerns.

Starting in 2019, international media reported that TikTok was deleting or restricting content related to politically sensitive topics in China, raising alarms within the U.S. government about potential political influence on the platform’s content moderation and public opinion algorithms. The U.S. promptly began restricting government employees from downloading or using TikTok on official devices. Subsequently, several Western countries followed suit, citing data security and personal privacy concerns, indicating that these worries had spread from the U.S. to its allied nations.

At the heart of the concern over TikTok as a high-risk entity is the fact that its parent company, ByteDance, is based in China and potentially has access to large amounts of American user data. Combined with its advanced algorithm and precision in content recommendation, TikTok holds significant influence over user information consumption and perception. Furthermore, TikTok’s rapid rise has directly impacted U.S. tech platforms—particularly Meta's Facebook and Instagram—adding layers of industrial competition, technological sovereignty, and political tension.

As a result, during Trump’s first term, TikTok was clearly defined as a “national security” issue rather than a matter of corporate competition, triggering a series of administrative, judicial, and legislative confrontations.

TikTok’s Role in the U.S. Market

According to Statista, total social media ad spending in the U.S. is projected to reach $95.77 billion in 2025 (up from $84.62 billion in 2024), indicating continued growth in the overall advertising market. In comparison, TikTok’s U.S. net ad revenue in 2024 stood at $18.49 billion, while Meta earned approximately $160.63 billion, showing a significant revenue gap and suggesting that Meta still holds the dominant monetization power in the U.S. social media ad market.

However, relying solely on ad revenue scale might underestimate TikTok’s true competitiveness in the U.S. market. In 2025, TikTok’s monthly active users (MAUs) in the U.S. are projected to reach 136 million—its largest user base outside China. While TikTok still lags behind Meta’s overall multi-platform user count, its distinct advantages lie in higher user engagement, longer average usage time, and a notably younger demographic—users under age 30 make up around 50% of its user base.

Thus, TikTok’s appeal to advertisers isn’t just about user quantity but also about more concentrated attention and more effective audience reach. With the overall U.S. social media ad market still expanding, TikTok is structurally well-positioned to continue capturing budgets allocated to short-form video and social ads, posing real competition to incumbents like Meta in terms of time spent and youth market coverage.

Timeline of U.S. Ban Actions Against TikTok

2019–2020 | Trump Administration “Nationalizes” the Issue

• Dec 2019: U.S. military branches (Navy, Army, etc.) banned TikTok on government-issued devices, marking the first national security-driven restriction from the federal level.
• Aug 6, 2020: Trump signed an executive order to prohibit transactions related to TikTok, laying groundwork for a potential full ban.
• Aug 14, 2020: Trump signed another order requiring ByteDance to divest TikTok’s U.S. operations and assets within 90 days, initiating a “sell it or ban it” strategy.
• Sept–Dec 2020: Multiple U.S. court rulings delayed the enforcement of the bans, stalling the executive order and preventing a full ban from taking effect.

2021 | Biden Administration Reverses Ban, Moves to Institutional Review

• June 9, 2021: President Biden signed a new executive order revoking Trump-era bans on TikTok and WeChat, instead instituting a broader, systemic review of apps controlled by foreign adversaries.

2022–2023 | Bans Spread to State Level, Congressional Scrutiny Intensifies

• From 2022: Numerous states banned TikTok on state government devices, expanding the ban from federal to state levels.
• Feb 2023: The White House ordered all federal agencies to remove TikTok from government devices by a set deadline, institutionalizing the federal ban and increasing congressional oversight.

2024 | “Sell or Ban” Enters Legislation, Becomes U.S. Law

• Mar 13, 2024: U.S. House passed a bill requiring ByteDance to divest TikTok.
• Apr 23–24, 2024: Senate passed, and President Biden signed the Protecting Americans from Foreign Adversary Controlled Applications Act, legally mandating a forced divestiture of TikTok or a nationwide ban.
• Dec 6, 2024: The D.C. Circuit Court of Appeals upheld the law, confirming that if the divestiture is not completed, the ban would take effect on January 19, 2025.

2025 | Trump’s Second Term Delays Enforcement, Enters Negotiation Phase

• Jan 17, 2025: The U.S. Supreme Court upheld the law’s constitutionality in TikTok v. Garland, giving final legal backing to the “sell or ban” approach.
• Jan 18–19, 2025: TikTok briefly ceased operations in the U.S. and was removed from app stores.
• Jan 20, 2025: As Trump began his second term, his administration delayed the ban’s enforcement by 75 days, allowing TikTok to resume U.S. operations and entering a gray zone of partial enforcement.
• H1 2025: Trump administration granted multiple extensions (April, June, etc.) to allow time for U.S.-China negotiations.
• Sept 2025: The U.S. and China reached a preliminary agreement in Madrid regarding TikTok’s U.S. operations and governance structure.

Current Deal: Dual Structure + Algorithm Licensing

After multiple rounds of negotiations, TikTok CEO Shou Zi Chew confirmed the finalized structure in an internal memo, emphasizing that TikTok would continue operating in the U.S. under regulatory compliance. Under the current agreement, TikTok has formed a joint venture with Oracle, Silver Lake Capital, and Abu Dhabi’s sovereign fund MGX, named “TikTok U.S. Data Security LLC” (TikTok USDS). This entity will oversee data security, content moderation, and software security in the U.S. market. Sensitive data from U.S. users will be stored in Oracle’s U.S.-based cloud centers, and TikTok USDS will also localize and operate the core recommendation system using only U.S. user data.

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In terms of ownership structure, ByteDance retains 19.9% and remains the largest single shareholder. Existing shareholders hold 30.1%, and new investors hold 50%. The board has seven seats: ByteDance holds one, existing shareholders hold two, new investors hold three, and one independent director is appointed. The deal is expected to be finalized on January 22, 2026.

Meanwhile, ByteDance continues to fully own and operate its core business activities—such as e-commerce and advertising—through its original corporate structure, ensuring separation of commercial operations from sensitive data management. TikTok’s recommendation algorithm is licensed (not transferred), and it runs solely on U.S. user data. The U.S. entity will pay a 20% licensing fee based on revenue generated from the algorithm.

TikTok did not sell its core business or proprietary algorithm but instead responded to regulatory demands through licensing, allowing it to retain a considerable degree of business flexibility. Despite pressure from the U.S. government, TikTok remains active in the U.S. market, avoiding a full exit due to political factors and preserving its commercial interests.

Conclusion

Overall, TikTok’s divestiture of its U.S. operations was not a strategic choice, but rather a response to political pressure. Without selling, it would have had to fully exit the U.S. market. By selling part of its operations, TikTok retains some market presence and earnings. More importantly, the agreement did not require TikTok to surrender control over its core technology. The company can still participate in operational decision-making and continues to benefit from U.S. market revenue via licensing and equity shares.

Given the circumstances, this structural compromise represents a relatively acceptable outcome for TikTok. If the agreement proceeds smoothly, it may reduce the platform’s political and regulatory uncertainty in the U.S., and could serve as a reference model for other Chinese firms navigating politically sensitive environments while seeking entry into the U.S. market.