By Hilary Schmidt, International Banker
“This is going to be American-operated all the way,” US President Donald Trump said as he signed an executive order on September 25 that paved the way for TikTok to be transferred to American majority ownership. “I have great respect for President Xi, and I very much appreciate that he approved the deal, because to get it done properly, we really needed the support of China and the approval of China.” Estimated to be in the region of $14 billion, the deal’s financial ramifications alone are considerable, to say the least. But with TikTok possessing an algorithm that US lawmakers have long sought to bring under American control, it is perhaps the deal’s geopolitical implications that will trigger the biggest shockwaves.
Owned by Beijing-based ByteDance, TikTok’s proposed sale is expected to hand over ownership of the enormously popular social-media app to a consortium of potential investors, including Oracle Corporation’s co-founder and the world’s second-richest man, Larry Ellison, as well as media mogul Rupert Murdoch, whose company News Corp owns the Wall Street Journal and Fox News among hundreds of other global media outlets. Investment firm Susquehanna International Group (SIG), which already holds a stake in ByteDance, and Andreessen Horowitz are also expected to participate, alongside the United Arab Emirates (UAE) state-backed investment fund MGX, which has close ties to the Trump Administration.
For some, therefore, the deal smacks of “crony capitalism” and demonstrates the president’s “personal brand of industrial policy—transactional, opaque, and designed to politically benefit him and his allies,” according to The New Yorker. “Last week, Trump said the owners of the US operations of TikTok would be ‘American investors, American companies, great ones, great investors’,” the magazine’s economics and politics writer, John Cassidy, wrote in a September 29 piece. “He didn’t mention the investment firm MGX, which is backed by the Emirati government and run by Sheikh Tahnoun bin Zayed al-Nahyan, an Emirati royal who is also the monarchy’s national-security adviser.
“When MGX bought two billion dollars’ worth of stablecoins issued by World Liberty Financial earlier this year, the purchase established the Trump company as a major player in the crypto world,” Cassidy added. “And, as the Times reported earlier this month, the move came as the UAE was trying to buy thousands of advanced microchips designed by the US firm Nvidia. The Trump Administration subsequently approved the purchase of the chips.”
But it may well be global geopolitics that proves the decisive motivating factor for the deal. The last few years have seen a marked rise in the US’ hostility towards TikTok, with simmering geopolitical tensions between the United States and China at the heart of American legislators’ desire to see it heavily regulated or even banned outright.
A September 25 survey conducted by the Pew Research Center (Pew) found that a fifth of adults regularly accessed news on TikTok, up from just 3 percent in 2020. “No social media platform we’ve studied has experienced faster growth in news consumption,” Pew stated, adding that the number rose to 43 percent when confined to adults under 30 years old, up from 9 percent in 2020.
“Adults ages 30 to 49 have also increasingly been getting news on TikTok: A quarter now say they do so regularly, up from just 2 percent five years ago,” Pew also found. “Much smaller shares of adults ages 50 to 64 and 65 and older say they regularly get news there (10 percent and 3 percent, respectively, as of this year).”
Such significant growth figures underscore the profound implications TikTok now has on Americans’ perceptions of news events around the world. This has put TikTok’s powerful algorithm—its system for curating unique content for each user based on his or her preferences and interactions with the app—under the spotlight.
It seems that Trump himself understands the algorithm’s power only too well. Indeed, when asked whether under new ownership it would begin showing users more MAGA (Make America Great Again)-related content, the US president quipped, “I always like MAGA-related. If I could, I’d make it a hundred percent MAGA related.” However, he also acknowledged that such a scenario would be unlikely. “But it’s not going to work out that way, unfortunately. No, everyone’s going to be treated fairly.”
Nonetheless, the algorithm’s power to influence American minds has perhaps never been more apparent in recent times than with Israel’s war in Gaza. By November 1, 2023, just a few weeks after the outbreak of the conflict, lawmakers and wealthy tech investors had renewed their calls to ban TikTok in the US—a staunch ally and the biggest financial and military backer of Israel—over what they called a pro-Palestinian slant that was undercutting support for Israel among young Americans.
“When I engaged with one post on TikTok supporting opposing views, my entire feed became aggressively anti-Israel,” Jeff Morris Jr., a tech venture capitalist and former executive with the dating app Tinder, posted on X at the time. “Israel is losing the TikTok war by a long shot.” US Senator Marsha Blackburn (R-TN), meanwhile, said that it “would not be surprising that the Chinese-owned TikTok is pushing pro-Hamas content”. A longtime critic of TikTok, Blackburn renewed her call for a ban on the app.
Edward Ahmed Mitchell, national deputy director of the Council on American-Islamic Relations (CAIR), however, described the push for a TikTok ban as being more about shutting down pro-Palestinian voices than national security. “TikTok has plenty of issues due to their relationship with the Chinese government, but allowing speech about Palestinian human rights is not one of those problems,” Mitchell explained to NBC News. “Certain political voices love free speech and hate cancel-culture, until they hear speech that they don’t like and want to cancel speech that they don’t like—especially when that speech is about Palestinian human rights.”
Fast forward to today, and many see the sale of TikTok as being significantly motivated by a desire to restore Israel’s badly damaged reputation among the US public. “We have to fight with the weapons that apply to the battlefields on which we are engaged. And the most important ones are on social media. And the most important purchase that is going on right now is, class? TikTok,” Israeli Prime Minister Benjamin Netanyahu explained to a group of social-media influencers when discussing the deal’s strategic importance during a recent visit to the US. “TikTok, number one. And I hope it goes through, because it can be consequential.”
What’s more, key figures involved in the deal have either previously expressed a commitment to shaping US public opinion in favour of Israel or are explicit supporters of the country. As the Quincy Institute for Responsible Statecraft recently explained in an article titled “Israel wins TikTok”, Larry Ellison is the single largest private donor to the Israeli Defense Forces (IDF) and has referred to the state of Israel as his own.
“Also, Ellison’s right hand at Oracle, Israeli-American Safra Catz, great friend of President Trump, who has travelled to Israel several times since Oct. 7, 2023, in support of its war and continued Oracle partnerships there, and in a July appearance in Israel told an audience that ‘we (Oracle) are on the side of freedom. We are on the side of democracy’,” Kelley Beaucar Vlahos, Quincy Institute for Responsible Statecraft’s editorial director, wrote. “She followed that with ‘some of the best people in the world are here in Israel, and there’s no question about that. And everyone knows it. Some of the big winners will be here. Mark my words’.”
A 2015 email to former Israeli Prime Minister Ehud Barak also revealed Catz’s views when she wrote, “We have to embed the love and respect for Israel in the American culture. That means getting the message to the American people in a way they can consume it.”
“This highly suggests that this transaction is more about geopolitics and ideology rather than a financial gain for investors,” Vlahos also contended. “Now, not only will American companies like Oracle, which has numerous government tech contracts spanning defense, intelligence, and civilian agencies, have access to TikTok’s user data, it will also have control of the algorithms that manage the kind of news, the messaging and images that all of those users see…. In essence, like Safra Catz says, the big ‘winners’ will be in Israel.”