What We Know—And Still Don't Know—About Trump's Announced U.S.-China TikTok Deal

Forbes

On "Forbes Talks," Forbes Reporter Emily Baker-White breaks down what we know, and don't know, about President Trump's recently-announced U.S.-China TikTok deal.  Read the full story on Forbes:   Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Hi, everyone. I'm Maggie McGrath, senior editor at Forbes. On Friday, the White House released

00:08some preliminary information regarding the U.S. deal for TikTok. Joining us to break it all down

00:15and to share some information about her new book on TikTok is my colleague, senior writer

00:20Emily Baker White. She is an investigative reporter for our tech team, and her new book,

00:25called Every Screen on the Planet, comes out this week. Emily, congratulations on publication,

00:31and thank you so much for joining us. Thanks so much. So we have a lot to talk about. Let's start

00:37with the news coming out of the White House. There's been a lot of questions swirling, including

00:41a conversation you and I had just last week about what exactly is this deal between the U.S. and

00:47China over TikTok's U.S. operations? What do we know now? We know somewhat more than we knew

00:55last week, but there's still a whole lot that we don't know. So for years, ByteDance, TikTok's

01:02Chinese parent company, has been trying to sell the U.S. government on some sort of arrangement

01:06that would assuage U.S. concerns that TikTok could pose a national security threat.

01:14That hasn't gone well for ByteDance in the past, and it went so poorly for them that Congress passed

01:19a law saying that ByteDance would have to sell TikTok or see it banned in the United States.

01:23However, when President Trump came into power, he said, we're going to ignore that law and we're

01:29just going to broker a deal, broker a sale. And that, in theory, was going to be a sale of the

01:35U.S. operations of TikTok. That is what President Trump and Vice President J.D. Vance, who has played

01:41a big role in the negotiations, say is happening now. But it might be that something sort of like

01:48that, but not exactly like that is happening now. It looks like there is a deal to sell

01:54some subset of TikTok's U.S. operations, but that deal does not control the recommendations algorithm

02:01that decides what you see on TikTok. It also likely doesn't involve some of the advertising

02:07and e-commerce parts of the app. And so details are still coming out about exactly what's in this deal.

02:16President Trump and J.D. Vance have also referred to it as a framework indicating that there may

02:20actually be some wiggle room between the parties about exactly what this deal looks like still today.

02:25In a statement from the White House, or rather a fact sheet, one of the bullet points read,

02:32ByteDance will hold less than 20 percent of the stock as required by law, choose only one director

02:38of the seven-seat board, and be excluded from the company's security committee. Now, you called this

02:45a framework. So is it possible, therefore, that just even those details could change?

02:51So I would say those details are unlikely to change. They, of course, could.

02:55I mean, this whole deal could still blow up. But I think what's important to note about that,

03:00the idea of a security committee, the idea about ByteDance having some representation on this board,

03:05but it being below a threshold, these ideas have been kicking around for years. Those ideas were part

03:10of a proposal that ByteDance made to the Biden administration, and the Biden administration

03:15ultimately rejected it, saying it wasn't strong enough. And so, to me, what is most interesting is

03:21is not the threshold at which ByteDance is excluded, the sort of maximum amount that they can own of

03:28the new U.S. TikTok entity. The question for me is, what's in the new U.S. TikTok entity? If it's not

03:33the algorithm, and it's not advertising, and it's not e-commerce, there are still valuable things that

03:39are included. Presumably, any new data created by U.S. TikTok users going forward would be part of that,

03:46and that's real and significant. But we have to look at, is this all of what we know as TikTok in

03:53the U.S., or is it some parts of what we know as TikTok in the U.S. that are included in this deal in

03:58the first place? Which also brings up the question of revenue, which I'm not seeing, at least in the

04:04pages that I printed, any revenue breakdown or distribution. Do we know? Is it 50-50, 60-40,

04:11or is that still to be determined? Yeah, so we know some things that we don't know

04:18that much. Late on Friday, Bloomberg published a report that ByteDance would likely get about 50%

04:25of the new U.S. TikTok's revenue going forward. That's part of the reason that the valuation of

04:31the U.S. TikTok at $14 billion is lower than a lot of people thought. If you're only entitled to

04:36half the revenue going forward, that'll cut your valuation down. But yeah, the way that ByteDance

04:43would continue to make money from the U.S. TikTok is through a series of licensing agreements.

04:48Obviously, they would license the recommendations algorithm to TikTok that's been out there for a

04:54little while, or to the new U.S. TikTok, I should say. The Chinese government did not allow, does not

05:00allow ByteDance to sell that recommendation's algorithm, and it had long said that it wouldn't,

05:06and so this is a sort of compromise. For a long time, there could be no deal because the Chinese

05:10government said you can't sell the algorithm, and the U.S. government said, well, no deal without

05:15the algorithm. The U.S. government is now saying, yes, deal, even without the algorithm, making a pretty

05:20material concession that the Biden administration was not willing to make. To your point about data

05:25security, there's also an item here about a purpose-built cloud environment in the U.S. run

05:30by Oracle, and we had seen Oracle and Larry Ellison's name kind of swirling around the speculation last

05:38week. What more do we know about Oracle's involvement in this deal? Yeah, so that specific thing about

05:45the data being held at a data center by Oracle, that's also not new. That's been part of ByteDance's

05:51pitch to the government for years. It's part of something that they called, may still call, Project

05:57Texas, where new U.S. user data would be held by Oracle in a secure Oracle data center, and ByteDance

06:05would have restricted access to it. That's actually been the case for the past couple years. ByteDance

06:10did this, and they tried to say, hey, U.S. government, this isn't a concern because, look, this data is

06:14already held by Oracle. So Oracle would keep that part of its contract with a new U.S. TikTok entity

06:23and slash, but Oracle is also an investor in the new U.S. TikTok entity, a buyer,

06:29one of the buyers, should this deal ultimately go through. I thought it was interesting, too,

06:35that there's a whole section of this fact sheet dedicated to American content creators on TikTok,

06:41small businesses. It feels like the administration is really trying to reach out to their supporters or

06:47to Americans writ large to say, hey, we got your back. Is there anything that has jumped out at you

06:54around the messaging around this and how creators and small businesses are responding?

07:00The thing that jumps out is sort of the way I've answered your last two questions, too, which is that

07:05this is what ByteDance has been saying for years. TikTok and ByteDance have made the case,

07:09essentially, that TikTok was too big to ban. It has so many creators on it, so many businesses

07:14rely on it that you couldn't possibly shut it down because it would hurt so many people who need it

07:19to advertise their products. And that idea actually is older than TikTok. It's the same playbook that

07:25Facebook and Google ran for years when people tried to regulate Facebook. Facebook would give,

07:31release all these statistics about the many, many, many small businesses that were propped up by

07:36Facebook or Instagram. And this is ByteDance doing the same thing. When you get that big,

07:42a lot of people rely on you and they're using that to their advantage.

07:47Well, speaking of creators and the algorithm, you and I were chatting right before we started

07:51recording about the excerpt of your book that ran just over the weekend and which folks can read on

07:56Forbes.com right now. But in this excerpt, you talk about the algorithm and the way it has started to

08:02generate recommendations for people, which have in turn boosted the profiles of some creators and

08:10some small businesses. And I don't want to give away the goose. I'll ask you to kind of explain it.

08:14But my question for you is how manufactured is the success of some of these creators? But you spoke to

08:20someone in Mexico who was kind of handpicking videos that went to the For You page. Can you talk about this?

08:26Yeah. This person's name was Jorge. He was a curator for ByteDance. ByteDance employed a lot of curators

08:35who essentially picked videos that they thought people would like to see and push them out into

08:40the universe. And there's nothing nefarious about that. That was his job. As far as I can tell,

08:46he did a great job of it and tried to push things that would be interesting to the people who were

08:52consuming TikTok back in 2018 in Latin America. What's interesting about that is, I think, especially

08:58with TikTok, right, if you go onto Instagram, if you go onto YouTube, you're telling it what you want

09:04to see. When you come to TikTok, TikTok tells you what you want to see. And you're not presenting any

09:12inputs. It's just happening. It's just happening to you. It's showing you what you want to know before

09:17you know to ask for it. And it's easy for us to say that's magic. That's the magic of the algorithm.

09:22The algorithm is all knowing. It can see into your soul. And like, no, actually an algorithm is a

09:31giant math problem. And the giant math problem has a bunch of inputs. And most importantly, like one of

09:38the central inputs on TikTok is how long you wait before you scroll to the next video. It knows that it

09:46takes you like two more seconds if there's a really, really, really attractive person on the screen,

09:51right? It takes you two more seconds if the colors are brighter, right? And it learns

09:58subconscious things that you're not meaning to tell it just through your behavior. And when I go back to

10:07this person I spoke to, this curator in Mexico, right? He was a guy, watched a lot of videos,

10:13thought this video will do really well. This video was really funny, right? And like, the algorithm

10:17doesn't have a sense of humor, especially when it comes to humor. It doesn't know what's funny. Like,

10:22I mean, even like, look at ChatGPT, very bad at understanding jokes, right? Algorithms don't

10:27understand irony. They don't understand satire. And so it was really important to have humans identify,

10:35oh my goodness, that's hilarious. This particular absurdity is really going to catch on with certain

10:42communities, right? And like, seeding that into the algorithm taught the algorithm what kind of

10:48things to recommend to more people, right? Especially early on in TikTok's history to have

10:54people making decisions about what they thought people wanted to see. The algorithm was learning

10:58from those decisions the whole time. And so TikTok is not, it's not a magic all-knowing piece of

11:07technology. It's a big math equation that was fed your preferences and my preferences and

11:13millions of other people's preferences and the key decisions made by the people actually working there.

11:19It was so interesting reading your description of this because I, as I've told you before,

11:24do not use TikTok, but I use Instagram. And I noticed sometimes when I fall down a rabbit hole of

11:29reading certain things, suddenly my recommended page looks, for instance, PT advice. I had an ankle

11:34injury earlier this year. Suddenly I'm getting skeletons and grafts and all of these PT videos

11:41on my Instagram. In spite of me liking so many recipes, following chefs, I use it for a lot of

11:49food curation. And I think that gets to what you were saying about the extra two seconds, right? I might

11:54not have been aware of how I was interacting with some of the videos as I was recovering from this injury,

12:00but my algorithm was, which is a little scary in a way.

12:04Totally. Because I mean, I think this gets to one of the themes of the book. And one of the things that

12:11ByteDance's creator talked about very early was this idea, like, you can go and ask the internet

12:18for information, tell the internet what you want, tell the search engine what you want and have it

12:22received to you. You can follow a person and say, I want to see that person's content, right? Those are

12:27expressed preferences. Those are us saying, I want the following information. But Zhang Yiming,

12:32the founder of ByteDance years ago, was talking about information looking for people as opposed to

12:38people looking for information. And he sort of believed that you could create a computer

12:45that knew what you wanted to see better than you did, which is like a really weird thing to think about.

12:51But if it knows enough about you and your preferences, and it knows enough about all the

12:56information that's out there, you don't know yet that there's a piece of news that's just broken,

13:00that's really important to your particular life. But it does, and it can serve it to you.

13:06Which sounds legitimately useful in some cases, as a reporter who's constantly looking for breaking

13:12news on a bunch of topics. It's also kind of dystopian. Because what if you don't want it to serve you

13:19more information about X, Y, or Z topic, even if you are interested, maybe you're going through a divorce,

13:25maybe you struggle with addiction. And those things are relevant to you. But you would actually

13:29prefer not to see so much of that. There was a dust up on Facebook years ago about people wanting

13:37to opt out of receiving more information about really tough topics for them. Things like cancer

13:42treatment, things about a pet passing away, right? Or a person close to you passing away. Maybe you just

13:47don't want to be confronted with more of that right now, even if it is relevant to your life.

13:52And the idea that we're going to replace our agency of looking for information,

13:59seeking out certain things, telling a program, I want you to show me this person's content.

14:04I want you to show me content about that. And just letting it decide, that makes me very uncomfortable.

14:09Well, what I think what is great about this excerpt is it gets to the human element of an algorithm. And

14:16you have this great quote from a former FTC commissioner, Maureen. She once suggested that

14:21people thinking about algorithms, I'm reading from the excerpt, replace the word algorithm with

14:26the words, a guy named Bob. Quote, is it okay for a guy named Bob to collect confidential price

14:32strategy information from all the participants in a market and then tell everyone how they should,

14:37how they should price? She said in one of her speeches that you quote, I have never thought about

14:42an algorithm in that way. Why did you include this particular quote in this chapter and in this

14:50excerpt?

14:51I love this quote. I loved it from the first moment I heard it. And I think it's true about

14:58a lot of things. Whenever we think, oh, there's this technological thing and it can do things that

15:04we can't do. And therefore we should let it do things that we wouldn't let a person do. Red flag,

15:11right away, red flag, like take a step back. Someone is deciding what that thing is going to do.

15:17Someone has programmed it to do these things. Someone has given it instructions about what to do.

15:24And if you don't want that person to have that information or to make that choice, you shouldn't

15:31want a faceless, nameless computer program to do that either. Because a faceless, nameless computer

15:36program can't be held into court to answer for its decisions, for one thing. If it harms somebody,

15:42there's a person at the other end of it who has to be held responsible. And so just thinking about

15:49algorithms as people, as the direct products of a person's output is a really good way to sort of

15:58like ground ourselves and say, okay, yeah, yeah, yeah. It's an algorithm, but it's an algorithm made

16:02by Bob or Steve, or, you know, shows you to, or like pick, pick your person. Right. But like,

16:08it's an algorithm made by a person and that person, and it's codifying that person's decisions. And I

16:13think as we move into a world with like AI chat bots, a world where we're more reliant than ever on

16:20complex pieces of technology, those pieces of technology are the codification of a person's

16:28preferences, a person's choices about how it should behave. And that's how we should think about them.

16:33And that's how we should regulate them.

16:35Codification of a person's choices. I think that's really so important. And I also liked

16:40what you said about grounding ourselves. It's just this year, social media and technology has felt

16:47overwhelming. Even for me, I will notice I'll go to look something up. And then by the end of the

16:51night, I've fallen into a wormhole. And that feels like it's happening more and more instead of less

16:55and less. And it's, it's very discombobulating. So that was one of the takeaways I got from this

17:02excerpt. But Emily, what is your goal for this book? What is the overarching message that you want

17:07readers to draw from it when they can finally read it after its publication on Tuesday?

17:12Emily Hock is so big. It is one of a few platforms that are so big. We're talking like

17:19the size of major religions, the size of Islam. It's hard to sort of quantify just how much power

17:27these things have over so many people. And the fact that it's so personalized means that it has

17:32more control over us than what we see on other apps. And, you know, a large part of the book is

17:41about the sort of superpower struggle between the United States and China to control TikTok,

17:46to own TikTok, to benefit from TikTok. That's true of all platforms of this size.

17:54I have a line in the intro where I say like, no wonder a thing this powerful, of course,

18:00strong men would come calling. Of course, they would come try to control it, come try to use it

18:05to their own benefit. And when you have such incredible consolidation of power over the information

18:12that we all consume, such powerful consolidation over so many data points about our lives,

18:19we should be really skeptical of whoever is in control of that machine. And we should be skeptical

18:26when any government has control over it. And that's something that we're seeing now with the

18:30Trump administration. A lot of people were really worried for a long time that the Chinese government

18:35could use TikTok to exercise control over us in some way. And that was reasonable. Now there are a lot

18:40of people worried that the Trump administration is going to use its control over TikTok to sort of

18:44exercise control over us and change the information that we see. We should be worried about that too.

18:50These things are so big that whoever is in charge of them, we should be wary about how they are shaping

18:57our understanding of the world around us.

18:59I feel like I could talk to you about freedom of information, freedom of speech, technological changes

19:05and algorithms all day. But you have a lot of other speaking engagements and interviews to get to

19:11this week. For folks who want to follow you, where should they go if they want the latest updates on

19:17where to hear your interviews, where to hear more about the book, and also where to buy the book?

19:22EveryScreenOnThePlanet.com exists. It will take you right now to pre-order websites, soon to straight up order websites.

19:30You can buy the book wherever books are sold. I am most frequently on Blue Sky. I also do have an

19:37account on X, but I posted frequently there. And I am doing a book tour. I'll have information on my

19:43socials about all of those stops soon. But please, please come out and see me if you can at a bookstore

19:50somewhere near you. Emily Baker-White, thank you for coming on. Congratulations again. I'm so excited for

19:56this book to come out to the world. You're such a talented reporter, a huge asset to Forbes, and I'm

20:00so excited for everyone to read this book. Emily Baker- Thank you so much. This has been fun.

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