ByteDance is positioned to possibly receive approximately half of the profit from TikTok’s U.S. operations even after selling majority ownership to American investors under a deal negotiated by President Donald Trump, according to people familiar with the arrangement.

As Bloomberg reports, the Beijing-based company plans to maintain its revenue stream through a dual structure: a licensing fee for its algorithm technology and a profit share proportionate to its remaining equity stake, said the sources, who requested anonymity because the terms haven’t been publicly disclosed.

Under the proposed terms, ByteDance will collect licensing fees estimated at about 20% of incremental revenue generated through its algorithm, the technology credited with making the platform engaging for users. For instance, at $20 billion in revenue, ByteDance could receive up to $4 billion in licensing fees alone.

Additionally, ByteDance may get up to 20% equity in the U.S. entity, entitling it to a corresponding share of profits from remaining revenue. The U.S.-backed consortium – expected to include Oracle Corp., Silver Lake Management, and Abu Dhabi-based MGX alongside existing investors – will hold roughly 80% ownership and share the remaining profits.

Valuation Discrepancy

This profit-sharing arrangement may explain the gap between analyst valuations and the administration’s stated price. Vice President JD Vance recently cited a $14 billion price tag for the U.S. business, substantially below previous analyst projections of $35-40 billion.

Last year former U.S. President Joe Biden signed legislation requiring ByteDance to divest TikTok’s U.S. operations to American ownership or face shutdown. Trump, after returning to office, has extended divestiture deadlines while negotiating a compromise solution.

The arrangement has drawn scrutiny from security experts and lawmakers. House China committee chair John Moolenaar expressed concerns about continuing algorithm licensing from ByteDance, noting the law prohibits cooperation between ByteDance and any TikTok successor on the recommendation algorithm.

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