The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Robyn Mak

HONG KONG, Sept 29 (Reuters Breakingviews) - Being used as a geopolitical pawn is never a good thing but Chinese social media giant, ByteDance, has avoided the worst outcome. Five years since U.S. President Donald Trump ordered the Chinese group led by Liang Rubo to sell the American operations of its TikTok app or face a ban on national security grounds, a deal that will keep the short-video app operational in the world's largest economy appears to have the blessing of both Beijing and Washington.

TikTok, regularly used by a fifth of U.S. adults to consume news, will be split into two units, Reuters reported last week, citing sources. One will be wholly-owned by the Chinese firm and operate the app's businesses such as e-commerce and advertising. The other will be a joint venture between ByteDance, which will hold a 20% stake, and investors led by software developer Oracle ORCL.N and buyout shop Silver Lake which will handle data security as well as license and manage the parent's prized algorithm.

If a final deal holds along those lines, it would be a positive outcome for ByteDance. U.S. officials including now Secretary of State Marco Rubio, had earlier argued for a full transfer of the TikTok algorithm to American owners. And until Trump launched his latest tariff war, Beijing signalled it would not allow a forced sale, raising the prospect that ByteDance would be left empty-handed.

That the privately-held company now looks set to receive lucrative licensing and other fees that could amount to roughly 50% of TikTok's U.S. profit, per Bloomberg citing sources, suggests ByteDance will retain significant economic value of its business which Bernstein analysts reckon may generate up to $25 billion in revenue this year.

Drawing a line under the years-long saga will free up Liang to double down on China. The company he co-founded is known in its home market as an app-factory but is now pouring its energy into building foundational artificial intelligence tools. ByteDance's models are competitive with those from Alibaba 9988.HK, DeepSeek and overseas peers; its video and image generation tools are also gaining popularity globally. The company recently launched an employee share buyback valuing itself at more than $330 billion, up from the $315 billion just six months ago, as its first-quarter sales surpassed Meta Platforms' META.O.

ByteDance was not in a position to dictate terms of the TikTok deal and the app's long-term fortunes in the U.S. may still depend on the Sino-American relationship. But, for now, Liang has a reason to celebrate.

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CONTEXT NEWS

ByteDance will maintain full ownership of TikTok's U.S. business operations and will cede management of the app’s data, content and algorithm to the newly formed joint venture, Reuters reported on September 26, citing three sources familiar with the matter.

Last week U.S. President Donald Trump signed an executive order declaring a plan to sell the China-based company's TikTok U.S. operations to a consortium of investors that include Oracle, Silver Lake and others to satisfy national security requirements.

Under the plan, TikTok's U.S. operations will be divided into two companies. One will handle the backend operations such as managing U.S. user data and the algorithm and the other will control the revenue-generating business operations such as e-commerce and advertising, sources told Reuters. The backend unit will be a joint venture in which ByteDance will be the single largest minority shareholder, while the frontend unit will be wholly-owned by ByteDance. The structure is still under discussion and could yet change, the sources said.

Separately, Bloomberg on September 26 reported that ByteDance will probably get 50% or more of the overall profit of the U.S. operation after its new owners take control, citing sources. Under this proposal, TikTok U.S. would pay ByteDance a licensing fee based on revenue generated from the algorithm, plus a roughly 20% profit share from the remaining revenue.

(Editing by Una Galani; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on MAK/ robyn.mak@thomsonreuters.com))