--:-- [Theme music fades out]
--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business and power. I'm Jessica Mendoza.
--:-- Ryan Knutson: [in the background] Hi, I'm Ryan Knutson.
--:-- Jessica Mendoza: Today is Wednesday, September 17th. Coming up on the show, inside the 11th hour proposal to save TikTok in the U.S.
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--:-- Jessica Mendoza: Earlier this week, officials from the U.S. and China flew to Madrid for yet another round of trade negotiations. For two days, the delegations holed up in a 17th-century palace, discussing terms about everything from soybean imports to tariffs. But one issue quickly emerged as a focal point – TikTok.
--:-- Alex Leary: For months, TikTok's U.S. presence has been hanging on the edge of survival as the U.S. and China negotiated over the app's ownership. And as the two sides met in Madrid, they faced a pressing deadline. Unless they could agree on a way to sell TikTok to a U.S. owner by today, September 17th, the app would go dark for its 170 million U.S. users.
--:-- Jessica Mendoza: It's a potentially make-or-break moment for TikTok. Today was the day that the last Trump extension expired. So it would have forced, essentially, the shutdown of the app.
--:-- Alex Leary: But at the last minute, they kind of emerged from these meetings and said, we have a framework of a deal. That's our colleague Alex Leary, who covers politics.
--:-- Jessica Mendoza: Now, the key word there is framework. That does not mean a deal. It means a framework, sort of the outlines of a deal.
--:-- Alex Leary: So one big caution here is that a lot of this is still being worked out. What did it take to get to this framework that we're at? A lot of private talks and backroom discussions, essentially high level. This is high stakes. So it's taken a lot of sort of behind the scenes wrangling among the Trump administration and leading business figures and companies.
--:-- Jessica Mendoza: So what's in this proposed deal and who comes out ahead?
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--:-- Jessica Mendoza: For years now, TikTok has been a target for politicians and policymakers on both sides of the aisle. That's because TikTok's parent company, ByteDance, is a Chinese company. Yeah, the U.S. has wanted to address national security concerns for years over TikTok.
--:-- Alex Leary: Concerns whether China was monitoring users or potentially forcing or promoting what the U.S. calls propaganda through the platform to sway minds on a range of issues or to monitor movements, etc.
--:-- Jessica Mendoza: Lawmakers have been sounding the alarm for years. Here's the problem with TikTok as it exists now. It is owned by a Chinese parent company that has direct ties to the Chinese Communist Party.
--:-- Alex Leary: I'm very concerned about TikTok taking all the private information that Americans put out to them. We got a Trojan horse living inside our country.
--:-- Jessica Mendoza: At the heart of the concerns was TikTok's powerful algorithm. It's what gets users so hooked on the app. That is what makes TikTok TikTok It so powerful and effective
--:-- Alex Leary: And so the concern is that the algorithm can be tweaked or adjusted to promote certain views or to highlight certain political points or simply to manipulate users and how they thinking or digesting information So that's a very powerful tool.
--:-- Jessica Mendoza: TikTok's parent company, ByteDance, has long pushed back on the idea that the app is a security threat. It's said it doesn't share data with the Chinese government and that its U.S. operations are firewalled off from Beijing.
--:-- Alex Leary: At first, Trump agreed with the national security concerns. In 2020, during his first term, he even tried to ban TikTok.
--:-- Jessica Mendoza: We're looking at TikTok. We may be banning TikTok. We may be doing some other things.
--:-- Alex Leary: One alternative that had been thrown around for years was to get an American company to buy the app. Plenty of suitors had lined up. At one point, Walmart wanted a piece. Microsoft explored a takeover. Even Kevin O'Leary, the guy from TV's Shark Tank, wanted in. None of it panned out.
--:-- Jessica Mendoza: In April 2024, under then-President Joe Biden, Congress gave the app a deadline. Either find a way to put TikTok under American ownership, or the app would be banned in the U.S.
--:-- Alex Leary: By that time, Trump was back on the campaign trail, running for re-election. and he started to change his tune on TikTok.
--:-- Jessica Mendoza: The youth vote is coming into view and his advisors are kind of telling him, look, you should get on board with this. This is a widely popular, especially among younger voters who could be persuaded to, you know, get behind you and you could save this app. You could be the savior and you could also, you know, harness a very potent political force.
--:-- Alex Leary: And so he was convinced of that. So I like TikTok. I like it.
--:-- Jessica Mendoza: A number of people were advocating for that, including his young son, Barron Trump, who is currently 19 years old and really tapped into the sort of TikTok movement.
--:-- Alex Leary: Can you talk about the day Trump launched his TikTok account?
--:-- Jessica Mendoza: I was actually at, it was a UFC event in Newark, New Jersey. You were there?
--:-- Alex Leary: I was there.
--:-- Jessica Mendoza: So Trump was at this event in Newark, New Jersey in June 2024. So he enters, you know, the arena to just rapturous applause. And right before he did that, Trump had released his first TikTok video, which was a video of him and UFC chief Dana White, who's a very popular figure himself.
--:-- Alex Leary: The president is now on TikTok. It's my honor.
--:-- Jessica Mendoza: Once Trump won the election, he started looking for ways to keep TikTok around. January 19th, 2025 was the deadline to either sell or ban the app. And the day before, on January 18th, the app went dark for 14 hours.
--:-- Alex Leary: This message appearing on screens, saying a law banning TikTok has been enacted in the U.S. Unfortunately, that means you can't use TikTok for now. We are fortunate that President Trump has indicated he will work with us on a solution.
--:-- Jessica Mendoza: With Trump about to take office, TikTok came back online. and kept running in the U.S.
--:-- Alex Leary: In the months that followed, trade tensions between the U.S. and China escalated, with the administration going back and forth with Beijing over things like tariffs and fentanyl.
--:-- Jessica Mendoza: And during those talks, TikTok became a bargaining chip. Both sides want to make a deal on larger issues. TikTok is tangled up in the sort of trade wars that Trump reignited, and this is a major leverage point for China, that it knows how popular the app is in the U.S. and how much Trump has been a convert to singing its praises and seeing its value.
--:-- Alex Leary: So they're not going to be eager to give it up without getting something in return.
--:-- Jessica Mendoza: Along the way, Trump extended the deadline to ban TikTok to September 17th, today. Which brings us back to Madrid. We have a framework for a TikTok deal.
--:-- Alex Leary: The two leaders, President Trump and party chair Xi, will speak on Friday to complete the deal.
--:-- Jessica Mendoza: But we do have a framework. That after the break
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--:-- Jessica Mendoza: Thank you. sponsored job credit to get your jobs more visibility at indeed.com slash journal.
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--:-- Jessica Mendoza: This episode is brought to you by Walmart. Did you know that Walmart is one of Fortune 100's best companies to work for in 2025?
--:-- Ryan Knutson: It's no surprise. Walmart is investing $1 billion in training and development to help associates build lasting careers with or without a degree.
--:-- Jessica Mendoza: In fact, 75% of Walmart management started in hourly roles. With benefits like healthcare, paid parental leave, and tuition support, Walmart isn't just a place to work, it's a place to grow. Learn more at walmart.com slash spark.
--:-- Alex Leary: So, Alex, what do we know about this deal? Or I guess you could call it like a framework for a deal.
--:-- Jessica Mendoza: The framework, as we understand it, we've reported, would generally give about 80% of U.S. control of a new sort of U.S.-based TikTok.
--:-- Alex Leary: The idea is there would be one version of TikTok still controlled and operated by ByteDance, and another version of the app would be operated by a new U.S. entity. And that control would be under U.S. investors.
--:-- Jessica Mendoza: Those investors include Oracle, Silver Lake, and a number of other companies that would be involved, including Sesquihana, which is already sort of an investor in ByteDance. KKR, General Atlantic, or other names that are said to be involved in this partnership consortium that would take 80% control of the U.S. TikTok.
--:-- Alex Leary: Now, the 20% would remain under Chinese control. I mean, 80% stake, new version of TikTok, this sounds like a pretty big deal.
--:-- Jessica Mendoza: It is a big deal. It's a massive, obviously very lucrative potentially for these companies, Oracle in particular, which already does business with TikTok.
--:-- Alex Leary: So it's a massive transaction if they can pull it off. The U.S. government would also get to choose someone to sit on the board of this new TikTok subsidiary.
--:-- Jessica Mendoza: They will be able to name someone, essentially say this is the U.S. government's recommendation for a board member.
--:-- Alex Leary: So they'll have a—it's essentially saying we're going to have more of a say here in choosing who sits on the board.
--:-- Jessica Mendoza: This week, a senior White House official said, quote, Any details of the TikTok framework are pure speculation unless they're announced by this administration.
--:-- Alex Leary: Under this new framework, existing TikTok users in the U.S. would be asked to shift to a new app, which TikTok has built and is testing, according to the journal's reporting.
--:-- Jessica Mendoza: So that's what the U.S. would get. And for China, one of the biggest prizes would be a symbolic one.
--:-- Alex Leary: Beijing has been pushing for a state visit from Trump. China has extended an invitation to President Trump to visit. President Xi would love to have President Trump on Chinese soil.
--:-- Jessica Mendoza: It a sign of Xi power and standing in the world on the global stage So that would be a big coup for him President Trump has said he will but he hasn also committed to when that will happen
--:-- Alex Leary: So there's sort of a little bit of a jousting going on. But the White House said it's serious about looking to make that happen.
--:-- Jessica Mendoza: And then there's the core issue, the thing underpinning all of these negotiations, the algorithm.
--:-- Alex Leary: In this deal, China would get to keep it. The deal includes some sort of licensing from ByteDance to this new U.S. TikTok, which is probably still going to be controversial because it's not completely detached from Chinese control.
--:-- Jessica Mendoza: That probably won't satisfy a lot of critics out there who say that that still raises concerns about what happens to user data.
--:-- Alex Leary: Right, because a licensing agreement doesn't quite work in the same way as getting ownership over something like an algorithm, right?
--:-- Jessica Mendoza: That's correct. It's like leasing a car, essentially. I mean, you're still, you have it in your control, but it's not yours ultimately.
--:-- Alex Leary: Would this new version of TikTok potentially resolve the concerns around national security? That's the hope. I mean, that would be the expectation.
--:-- Jessica Mendoza: That's certainly how they will sell it, that this is sort of a good compromise. But it's hard to imagine that it will completely alleviate concerns that a number of lawmakers still have about TikTok and national security concerns, given that Beijing is still going to have a hand on things through the way it operates with businesses in that country.
--:-- Alex Leary: So I think the debate will continue. TikTok will survive, but the debate over its value and its security will persist.
--:-- Jessica Mendoza: After the administration announced the new framework, Trump again pushed back the deadline for a TikTok ban to December 16th.
--:-- Alex Leary: The new date gives both sides more time to hammer out all the details of an agreement.
--:-- Jessica Mendoza: The Treasury Secretary says the deal will be confirmed by Trump and Xi after a call on Friday.
--:-- Alex Leary: So does this framework mean that TikTok won't be banned in the U.S. anymore? Like that prospect is off the table now?
--:-- Jessica Mendoza: It's getting there. It's getting to being off the table.
--:-- Alex Leary: So I just, it's hard to fathom that the Trump administration will let TikTok wither on its watch, given how much Trump has, you know, staked. You know, he has shifted 180 degrees on the thing.
--:-- Jessica Mendoza: And, you know, it's just hard to imagine him suddenly abandoning that and the tens of millions of people that are looking to him to save it.
--:-- Alex Leary: What does this tell us, Alex, about TikTok in politics today? Like, how important it's become?
--:-- Jessica Mendoza: It's essential. It's absolutely essential. Both parties know it.
--:-- Alex Leary: The law that called for the sale or the ban of TikTok was widely bipartisan. And yet you've got lawmakers on both sides of the aisle embracing TikTok and, of course, other forms of social media.
--:-- Jessica Mendoza: On the one hand, there's, you know, yes, we need to address these concerns. On the other, it's like, we can't give this up. This is too powerful a tool to reach voters, especially young ones who are sometimes elusive in politics.
--:-- Alex Leary: That's all for today, Wednesday, September 17th.
--:-- Jessica Mendoza: The Journal is a co-production of Spotify and The Wall Street Journal.
--:-- Alex Leary: Additional reporting in this episode from Rebecca Fung, Rafael Huang, Amrit Ramkumar, and Lingling Wei.
--:-- Jessica Mendoza: Thanks for listening. See you tomorrow.
--:-- Ryan Knutson: Powered insights instantly move you from complexity to clarity. Automated analysis, real-time reporting, strategic recommendations, all at your fingertips.
--:-- Jessica Mendoza: Transform how your finance team works and watch your business grow.
--:-- Ryan Knutson: Stop wasting time. Start making smarter decisions. Learn more at insightsoftware.com.ai.
