ByteDance to Retain 50% of US TikTok Profits Under Trump-Negotiated Deal Despite Ownership Transfer

TikTok's Chinese parent company ByteDance will likely receive approximately half of the profits from the platform's US operations, even after selling majority ownership to American investors as part of a deal arranged by President Donald Trump, according to sources familiar with the negotiations.

ByteDance is anticipated to collect a licensing fee on all revenue generated from providing its algorithm to the US operating entity, plus a share of profits proportional to its equity stake. Sources who requested anonymity due to the confidential nature of the terms indicate that the Beijing-based parent company will probably receive 50% or more of the overall profit from the US operation after the new owners take control.

ByteDance, TikTok, and the White House did not respond when asked to comment on these arrangements.

This profit-sharing structure adds another layer of complexity to an extraordinary corporate situation that has spanned multiple US administrations. President Joe Biden previously signed legislation requiring ByteDance to transfer control of TikTok's US operations to American ownership or face shutdown. Since returning to office, Trump has repeatedly extended the deadline for a sale while negotiating a compromise to keep the service operational—often crediting TikTok support for helping him win the 2024 election.

Last week, Trump and Chinese President Xi Jinping discussed the deal by phone, with the US side stating the leaders had reached an agreement for the sale. However, Chinese authorities have not confirmed this consensus, and transaction details remain unfinalized. Vice President JD Vance created further confusion Thursday when he mentioned a price tag of approximately $14 billion—substantially below the $35 billion to $40 billion valuation analysts had expected.

The profit-sharing arrangement may explain this significant discrepancy. Under the current proposal, TikTok US would pay ByteDance a substantial licensing fee for using its algorithm—the technology core that makes the service so engaging. ByteDance may receive 20% of incremental revenue generated through the algorithm, according to one source. At $20 billion in revenue, for example, ByteDance could collect as much as $4 billion.

Additionally, ByteDance would receive roughly 20% of the profit from the remaining revenue, aligned with its equity stake. The US-backed consortium—likely including Oracle Corp., Silver Lake Management, Abu Dhabi-based MGX, and existing investors—would share the remaining profit. This group is expected to control approximately 80% of the US business.

This distribution of profits under the new venture helps explain the substantial gap between analysts' valuation assessments and the price mentioned by the Trump administration.

Ashwin Binwani, founder of Alpha Binwani Capital who does not hold ByteDance shares, characterized the $14 billion proposal as "potentially the most undervalued tech acquisition of the decade." He estimated this figure represents just a third of TikTok's actual value, noting, "By every major financial metric and peer comparison, this price tag appears dramatically misaligned with reality."

Vance did indicate that the purchasers will "ultimately" determine the final amount paid. It remains unclear how close ByteDance and the acquiring consortium are to finalizing terms.

The Chinese embassy in Washington responded to Trump's latest comments by reiterating their previous position: "The US side needs to provide an open, fair and non-discriminatory environment for Chinese investors."