TikTok took a major step toward avoiding a U.S. ban last week. Its chief executive, Shou Zi Chew, announced that the company had signed binding agreements to spin its U.S. operations into a new joint venture with American investors set to close on Jan. 22. President Trump has blessed the framework, declaring that he is “saving” TikTok while protecting national security.
Americans should be skeptical. As former Treasury and Justice Department officials who worked on TikTok policy in the Biden administration, we believe the proposed structure fails to resolve the national security risks and revives elements of a plan the U.S. government has already rejected. Most concerning, it appears to endorse an arrangement that TikTok itself told the courts it could not realistically implement in accordance with federal law.
Last year Congress passed bipartisan legislation to address two national security risks: China’s potential access to the data of roughly 170 million American users and its ability to manipulate TikTok’s content recommendation algorithm. Lawmakers of both parties believed the app could secretly assist the Chinese Communist Party’s intelligence, law enforcement and national security efforts to recruit intelligence assets, blackmail Americans or influence U.S. elections. Unless TikTok’s Chinese parent company, ByteDance, sold its U.S. assets to an American buyer, the app would be banned in the United States.
Mr. Trump’s deal preserves many of the ties to China that the law was designed to sever. ByteDance would reportedly license or transfer its recommendation algorithm to the new U.S. entity. TikTok would continue to manage “global product interoperability,” meaning the American app would remain integrated with TikTok’s worldwide platform. Oracle, the app’s U.S. cloud provider, would serve as a “trusted security partner,” monitoring the system and eventually retraining the algorithm. Make no mistake: In this new arrangement, Beijing will still have leverage over the newly structured entity.
The implications of China’s continued involvement are far-reaching. For years Washington has urged its partners to restrict Chinese technology firms: It has barred Huawei from 5G networks and tightened export controls on semiconductor manufacturing equipment and Nvidia’s advanced artificial intelligence chips. If the president can stretch a bipartisan law forcing TikTok’s sale, which was upheld unanimously by the Supreme Court, allies and adversaries alike will assume that America will no longer enforce its security laws when it is easier not to.
To us, the TikTok deal looks familiar. It closely resembles an earlier proposal called Project Texas, which allowed ByteDance to remain involved in U.S. operations. The government ultimately deemed that proposal inadequate.
Under Project Texas, the government warned that there would be “no way to ascertain in real time” whether China was accessing or manipulating TikTok’s data or algorithm — even with enhanced data controls and third-party auditing. ByteDance itself told U.S. officials that the platform’s source code contained roughly two billion lines of code, software so large that Oracle estimated it would take years just to review.
For those reasons, the Justice Department concluded that simply monitoring ByteDance would not be enough to prevent covert access or manipulation. Ensuring that ByteDance was adhering to U.S. law would require “resources far beyond what the U.S. government and Oracle possess,” the Justice Department said. Congress endorsed that assessment when it passed a law requiring a clean break with no exceptions.
TikTok acknowledged the depth of its entanglement with China. In a sworn declaration, the company explained that severing the U.S. platform from the globally integrated app was “not feasible” on the law’s timetable. The American app depends on a vast amount of code developed and maintained by thousands of engineers worldwide, including in China, TikTok said.
So why is ByteDance still involved in the deal announced last week?
The answer lies in a combination of hard constraints and mounting pressure to reach an agreement. China placed TikTok’s algorithm on its export control list in 2020, giving Beijing veto power over any meaningful technology transfer. Chinese officials have shown little interest in approving the forced export of intellectual property from one of their most valuable firms.
And in the United States, the financial and political incentives to keep TikTok alive are substantial. ByteDance’s American investors, including KKR, General Atlantic and Susquehanna International Group, stand to lose billions if a ban goes through. Oracle will significantly expand its role with the deal. Apple and Google, whose app stores distribute TikTok, hope to avoid potential penalties under the law. After repeatedly sidestepping the statute’s divest-or-ban deadline, the administration appears eager to claim a win and unwilling to let a wildly popular service go dark.
But the national security concerns have not disappeared. China remains America’s most significant strategic rival, and it has demonstrated both the willingness and the capacity to use private companies to advance its goals. Under the proposed arrangement, Beijing would still retain leverage over a platform that shapes what millions of Americans see every day — influence that China would never allow the United States to wield over its own digital ecosystem.
The White House has said that it approved the TikTok deal after an interagency process led by the vice president and involving defense, law enforcement and intelligence agencies. The administration should explain how it reached its conclusion. And given the stakes, the officials and executives involved should offer to testify and answer questions publicly.
Mr. Trump and his team deserve credit for seeking a solution to a problem that the Biden administration ultimately left unresolved, even as TikTok became more embedded in American economic and cultural life. If the deal truly adheres to the law and protects national security, more transparency would strengthen its credibility. If it cannot withstand scrutiny, that answer would be just as important — for investors, for Congress and for the public.
Jim Secreto was a counselor for investment security at the Department of the Treasury during the Biden administration. Brett Freedman was chief of staff at the national security division of the Department of Justice.
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