Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Last Friday, President Donald Trump announced that his Chinese counterpart
Speaker 2: Shi Jinping, had tentatively approved a deal to save TikTok
Speaker 2: in the US.
Speaker 3: I had a great goal with President Jay and as
Speaker 3: you know, he approved the TikTok deal and we're in
Speaker 3: the process with.
Speaker 2: Under the proposed agreement, TikTok's US operations would be separated
Speaker 2: from its Chinese parent company byt Edance, and a group
Speaker 2: of new US backers would own a majority stake in
Speaker 2: the company.
Speaker 3: This deal is part of a broader push to put
Speaker 3: the Trump trade war behind them to re engage with
Speaker 3: the US administration.
Speaker 2: Mark Anderson is a Bloomberg Asia Tech editor based in
Speaker 2: Hong Kong.
Speaker 3: The very fact these two men were speaking was very significant.
Speaker 3: Of course, the relations between China and the US are
Speaker 3: at one of their lowest points for you years, and
Speaker 3: both leaders are really looking to ratchet down the tension
Speaker 3: and move on to the next chapter.
Speaker 2: On Friday, China's Foreign Ministry stops short of saying that
Speaker 2: Beijing had given its final blessing and urged fair treatment
Speaker 2: of Chinese interests.
Speaker 4: Is the toy for of the Chinese statements.
Speaker 5: Well, I think I think so. I mean when you
Speaker 5: say fully aproved, I don't know what that means. We
Speaker 5: have to get we have to get it signed.
Speaker 4: I guess most China analysts will tell you that when
Speaker 4: she goes to those meetings, he sees it as sort
Speaker 4: of a bow tying moment. All the work has been
Speaker 4: done and he is there to bless things.
Speaker 2: Josh Wingrove is Bloomberg's senior White House correspondent. He's been
Speaker 2: covering the fight over TikTok since twenty twenty, when then
Speaker 2: President Trump signed an executive order calling for its parent
Speaker 2: company to divest its ownership or face a man in
Speaker 2: the US.
Speaker 4: Trump doesn't work that way, right. Trump wants to get
Speaker 4: in it and pass it a deal himself and leave
Speaker 4: the fine prend to tomorrow or to others. And so
Speaker 4: that has been just sort of like an up is down,
Speaker 4: down is up, diametrically a toast approach between the two countries.
Speaker 2: Right now, This is the big take Asia from Bloomberg News.
Speaker 2: I'm wanha. Every week we take you inside some of
Speaker 2: the world's biggest and most powerful economies and the markets,
Speaker 2: tycoons and businesses that drive this ever shifting region. Today
Speaker 2: on the show, we're diving into the TikTok deal between
Speaker 2: the US and China, what it means for American users,
Speaker 2: and who gained the upper hand at the negotiating table.
Speaker 2: The battle over TikTok's fate in the US has been
Speaker 2: brewing for years. The app is owned by a Chinese
Speaker 2: corporation and exploded in popularity with American users back in
Speaker 2: twenty twenty, during the early days of the COVID pandemic.
Speaker 2: Up heart, Hey, everybody, welcome to my TikTok page.
Speaker 5: Okay, then what down should I try first?
Speaker 4: I love to take.
Speaker 2: Since then, TikTok has experienced the type of growth most
Speaker 2: tech companies can only dream of. It has more than
Speaker 2: one hundred and seventy million users in the US alone,
Speaker 2: that's half of the population, and its parent company, by Dance,
Speaker 2: is valued at more than four hundred billion dollars, making
Speaker 2: it the most valuable private business in China. Now.
Speaker 1: To US based.
Speaker 2: Users, the app feels so American. It's widely popular with
Speaker 2: gen zs, and it created a new class of entrepreneurs
Speaker 2: influencers who've turned their Internet hustles into full time careers.
Speaker 3: Here's how much I made it off of social media
Speaker 3: as a college student who has twenty thousand dollars on TikTok.
Speaker 2: If you want to go viral here on tech talk,
Speaker 2: you're going to do these four things. But the app
Speaker 2: is very much not American, and Bloomberg's Asia Tech editor
Speaker 2: Mark Anderson says that's a big part of the problems.
Speaker 3: Have long been concerned that TikTok could be used to
Speaker 3: spy on American citizens. This stems from the fact that
Speaker 3: China requires its companies to share national security data with
Speaker 3: its government, so US officials are worried that China's government
Speaker 3: could abuse the data of US TikTok users. You know,
Speaker 3: they could collect dossia's a personal information, they could blackmail them,
Speaker 3: they could exploit content preferences.
Speaker 1: And a lot of concern about political interference during the action.
Speaker 5: Season, especially in US elections.
Speaker 3: Yes, critically, in the twenty twenty US election, TikTok was
Speaker 3: a very powerful platform. It's worth noting that Donald Trump
Speaker 3: personally benefited from this, and there have been studies that
Speaker 3: have shown that his ticket was boosted by TikTok, so
Speaker 3: I think for him it's a personal issue. I've had
Speaker 3: more people say, could you try and keep TikTok alive?
Speaker 5: I use TikTok. I mean I have to admit it
Speaker 5: in the election, and look how I did with you.
Speaker 5: No Republicans come alone today.
Speaker 2: President Trump is a TikTok advocate, but in his first
Speaker 2: term he pushed for a ban, calling the app a
Speaker 2: threat to national security. That sentiment was echoed by President Biden,
Speaker 2: who signed a law requiring Byteedance to either Celtic Talk
Speaker 2: or discontinue service in the US. The Supreme Court upheld
Speaker 2: that ban and put the fate of the app back
Speaker 2: in Trump's hands.
Speaker 4: President Trump has been deferring enforcement of that law by
Speaker 4: executive action, and no one really seems spun up about it.
Speaker 4: But it also does not seem clear that he has
Speaker 4: iron cloud legal authority to do it.
Speaker 2: Bloomberg's Josh Wingrove and Mark Anderson say what's become clear
Speaker 2: in recent months is that Presidents Trump and she are
Speaker 2: looking for a solution for TikTok and for opportunities to
Speaker 2: ease tensions between the two countries.
Speaker 3: The drama over trump Tariff's reaching up to one hundred
Speaker 3: and forty five percent is still very fresh in the
Speaker 3: mind for Sijenping, who's very much trying to change the
Speaker 3: relationship in a way that benefits Beijing and possibly divest
Speaker 3: TikTok at a crucial moment that helps him navigate the
Speaker 3: next chapter in an advantageous way and secure better terms
Speaker 3: for Chinese exports to the US.
Speaker 1: What do we know about the agreements that were reached
Speaker 1: on TikTok so far?
Speaker 3: What we know about the deal so far is that Oracle,
Speaker 3: the software giant, will take a major role in leading
Speaker 3: a consortium that will also include Anderson Horovitz and silver
Speaker 3: Lake Management. They will have an eighty percent or more
Speaker 3: ownership stake in TikTok us as required by a law
Speaker 3: that was passed last year in the United States. By dance,
Speaker 3: the owner of TikTok at the moment must reduce its
Speaker 3: stake to twenty percent or less.
Speaker 2: On top of that, the White House says this new
Speaker 2: US only TikTok will be controlled by a board with
Speaker 2: seven members, six of whom will be American. In an
Speaker 2: interview with Fox News, Trump suggested that Michael Dell and
Speaker 2: the family behind Fox, specifically Lachlan Murdoch and his father Rupert,
Speaker 2: may also be involved in the TikTok takeover.
Speaker 3: I hate to tell you this, but a man named
Speaker 3: Lachlan is involved.
Speaker 5: You know, Lachlan is It's a very unusual name, Lachlan.
Speaker 3: Murdoch, mister murder, I believe, and you call him and
Speaker 3: Rupert is.
Speaker 5: Probably going to be in the group. I think they're
Speaker 5: going to be.
Speaker 2: Then there's the platform itself. While it's not clear yet
Speaker 2: whether users will have to download a new app or
Speaker 2: update their existing one, Mark says TikTok will create a
Speaker 2: new platform for users in the US.
Speaker 3: The deal will create a new entity, a new app
Speaker 3: that users will migrate to, and it will recreate the algorithm.
Speaker 3: So I think the new owners are hoping for as
Speaker 3: little disruption as possible to the user experience that these
Speaker 3: one hundred and seventy million people know and love.
Speaker 2: And of course the algorithm has been such a huge
Speaker 2: point of contention. Right, this is what is used by
Speaker 2: TikTok to suggest stories, suggest reels for people to right.
Speaker 3: The algorithm is a key sticking point for this deal.
Speaker 3: The US law that was passed in twenty twenty four
Speaker 3: says by Dance must give up complete control of the
Speaker 3: algorithm and the technology that supports the algorithm if it's
Speaker 3: going to keep TikTok alive in the country. But from
Speaker 3: the very beginning of these talks about deal, and as
Speaker 3: recently as a few weeks ago, the Chinese government has
Speaker 3: set it refuses to do that. Most social networking platforms
Speaker 3: rely on users to share content with each other. What
Speaker 3: TikTok did that's so revolutionary is they created a way
Speaker 3: for the app itself to suggest content to users through
Speaker 3: their recent activity and their declared interests. So it really
Speaker 3: allows people to interact with a platform completely on their own,
Speaker 3: without any friends in the real world.
Speaker 2: A Beijing official said that my Dance has agreed to
Speaker 2: license its algorithm to the new US version of the
Speaker 2: TikTok app, but that's not giving up complete control. She
Speaker 2: and Trump may decide that's good enough, it may not
Speaker 2: comply with US law. Under the proposed deal, TikTok's US
Speaker 2: owners would lease a copy of byte Dance's algorithm, and
Speaker 2: Oracle would help recreate and retrain it from the ground up.
Speaker 2: Oracle would also provide security for the algorithm and store
Speaker 2: data from US users in a secure cloud. The White
Speaker 2: House says Byteedance will not have control over or access
Speaker 2: to any information or algorithm in the US.
Speaker 3: So basically what they're trying to do is ensure that
Speaker 3: American buyers actually do control the recommendation software behind TikTok
Speaker 3: and the US And this gets to a key concern
Speaker 3: by US lawmakers over the past few years, really, which
Speaker 3: is that Chinese companies are mandated by law to share
Speaker 3: user data with the Chinese government.
Speaker 2: Coming up, what this means for US China relations and
Speaker 2: who gained the upper hand at the negotiating table. There
Speaker 2: was a lot at stake for both the US and
Speaker 2: China in the negotiations over TikTok. Mark Anderson says it's
Speaker 2: a toss up who came out on top.
Speaker 5: I think you could say it's a win win.
Speaker 3: The US gets a key concession from China that it's
Speaker 3: been seeking for years, and China, within the broader context
Speaker 3: of tariffs, geopolitical tensions, and the Ai race, Beijing might
Speaker 3: start to see TikTok as a bargaining chip to get
Speaker 3: a better deal in other, possibly more critical areas. Remember,
Speaker 3: Beijing and Washington are due to resume trade talks, and
Speaker 3: there are many other issues on the table that both
Speaker 3: sides need to hammer out, fentanyl, nuclear proliferation, access to
Speaker 3: AI technology. These are just a few of the bigger
Speaker 3: issues on display here, But.
Speaker 2: Bloomberg's whine House correspondent josh Win Grove says TikTok and
Speaker 2: the national security alarms it raises seems to be a
Speaker 2: bigger concerned to Washington in Beijing.
Speaker 4: I think both sides think they have leverage, but it
Speaker 4: sure seems like the Chinese certainly do, if only because
Speaker 4: Trump is backing off what had been a position of
Speaker 4: his and we're seeing China able to squeeze in key
Speaker 4: sectors in a way that is alarming the US. Now
Speaker 4: that might be a wake up call for both parties.
Speaker 4: I should know some of these issues were simmering under
Speaker 4: the Piden administration, but it's pretty clear that China realizes
Speaker 4: what the pressure coins are and is willing to press
Speaker 4: on them if needed. And President Trump, chiefly through tariffs,
Speaker 4: but not just through tariffs, through export controls and otherwise
Speaker 4: also is doing that. And that is I think the
Speaker 4: tension right now, in particular in the Republican Party is
Speaker 4: like how far is too far and how much deal
Speaker 4: making is okay. Trump's heading into a midterm election does
Speaker 4: not want tariffs showing up on everyone's receipts left, right,
Speaker 4: and center. So right now the bar to make a
Speaker 4: deal with Trump seems to be shifting, and Koreau have
Speaker 4: made deals UK China seems to be really driving towards
Speaker 4: one or at least driving towards some sort of medium
Speaker 4: term certainty. Using TikTok almost as like a then edge
Speaker 4: of the wedge to get people to the table. But
Speaker 4: the jury is very much out and no one knows
Speaker 4: where it's going to land.
Speaker 2: With China, most of the details of the TikTok deal
Speaker 2: have come from the US, China has been largely silent. Still,
Speaker 2: Mark says it's a positive sign, an indication that the
Speaker 2: two superpowers are willing to sit down and talk business.
Speaker 3: According to Trump, Chinese President's Jen Ping has approved the deal,
Speaker 3: but so far Beijing has only really issued broad statements
Speaker 3: without directly referring to any deal, saying it respects the
Speaker 3: wishes of the company and is glad to see business
Speaker 3: negotiations in line with market rules, just very general language
Speaker 3: that doesn't indicate any kind of imminent signing of a deal. However,
Speaker 3: they were very positive about the fact that Trump and
Speaker 3: she were talking. They called the phone call a pragmatic,
Speaker 3: positive and constructive talks. So I think that sort of
Speaker 3: indicates the general feeling in Beijing, which is that this
Speaker 3: deal is part of a broader push to move closer
Speaker 3: to the US to put the Trump trade war behind
Speaker 3: them Mark.
Speaker 2: Just before the phone call took place last week, Trump
Speaker 2: reportedly halted more than four hundred million dollars in military
Speaker 2: aid to Taiwan. That's according to the Washington Post. Now
Speaker 2: we don't know if that move is connected to the
Speaker 2: TikTok deal, but still that's a significant development on its own.
Speaker 1: How are people reading that?
Speaker 3: I think it's part of Trump's transactional diplomacy. We've seen
Speaker 3: it in Europe with NATO, But of course it serves
Speaker 3: his purposes of appeasing a key Chinese demand as the.
Speaker 5: Talks for this TikTok deal are taking place.
Speaker 3: So I would view it as possibly part of Trump's
Speaker 3: art of the deal and also part of his transactional
Speaker 3: diplomacy where he expects even the most key US allies
Speaker 3: to pay their own way on defense.
Speaker 2: We know that Beijing views Taiwan as an inseparable part
Speaker 2: of its Chinese territory and US officials have said that
Speaker 2: she wants the Chinese military to be ready to invade
Speaker 2: Taiwan by twenty twenty seven if the US support for
Speaker 2: Taiwan is now on the table, and that's obviously a
Speaker 2: big if, that would be a huge win for China.
Speaker 3: Yeah, the US is by far Taiwan's most important for
Speaker 3: an ally, and I think Taiwan has been reading the
Speaker 3: writing on the wall and it's been ramping up its
Speaker 3: own defense commitments in part to play k Trump and
Speaker 3: his transactional approach to their relationship. Taiwan's president has announced
Speaker 3: plans to increase military spending and approve special funding to
Speaker 3: acquire more drones and ships. So I think those are
Speaker 3: the kinds of overtures that Trump wants to see from
Speaker 3: Taiwan right now. He wants to see them taking defense
Speaker 3: into their own hands and maybe not relying on the
Speaker 3: US as much as they used to. He wants to
Speaker 3: be seen as a harder sell. He wants to negotiate
Speaker 3: and get better deals for the US by posture and
Speaker 3: making countries think twice before counting on support from Washington.
Speaker 2: Mark, this deal strikes me as very much of a
Speaker 2: Trump deal right and art of the deal agreement. But
Speaker 2: it doesn't seem as if people are really up in
Speaker 2: arms about that that it's so transactional with everything on
Speaker 2: the table up for negotiations.
Speaker 3: Let's not forget that Trump is a master at messaging,
Speaker 3: and I think the messaging here is very good for
Speaker 3: the people he cares about the most in the US,
Speaker 3: which are of course his voters in his bass. He
Speaker 3: can say I went to China, I went to President
Speaker 3: chigen Ping, and I extracted a deal that couldn't have
Speaker 3: been struck under Joe Biden. I was able to get
Speaker 3: them to concede on a number of critical points. I
Speaker 3: was able to get the algorithm essentially copy and pasted,
Speaker 3: and now under American ownership, I was able to get
Speaker 3: six out of seven seats on.
Speaker 5: The board for Americans.
Speaker 3: I think for him it looks really good, and I
Speaker 3: think he knows what he's doing when it comes to
Speaker 3: selling this deal to Americans and to his base.
Speaker 1: How does it then make she look?
Speaker 5: For me?
Speaker 3: I think it makes she look like he's more concerned
Speaker 3: with the next ten years than the next six months.
Speaker 3: He's playing a very long game here. He senses an
Speaker 3: opportunity with Trump, like many other leaders, I think he
Speaker 3: sees this transactional, very short term focused American president. How
Speaker 3: many of those do you get in your lifetime? So
Speaker 3: I think for him, maybe TikTok was the price to
Speaker 3: pay for a better tariff deal, or a better deal
Speaker 3: on rare earth magnets, better deal on access to Boeing airplanes.
Speaker 3: These are the more important issues to the Chinese government.
Speaker 2: But Josh says whether the TikTok deal could serve as
Speaker 2: a blueprint for how Chinese companies might strike future deals
Speaker 2: with Washington remains to be seen.
Speaker 4: I think it's unclear right now. For instance, Trump hasn't
Speaker 4: watered down restrictions on Chinese electric vehicles that carry similar
Speaker 4: national security risks to a lot of folks. But it
Speaker 4: does seem like everything sort of on the table right.
Speaker 4: One thing we've also seen is on semiconductor chips, this
Speaker 4: real transactionality, right, Trump allowing the age twenty chip to
Speaker 4: be sold to China, but only so long as the
Speaker 4: US government gets a fifteen percent cut of each of
Speaker 4: those sales. So like the Hawk view is sort of
Speaker 4: shifting a little bit, it seems in Washington right now,
Speaker 4: where there's certain things aren't budgeting, like cars, farmland, whereas
Speaker 4: other things maybe are more up for negotiation than we knew.
Speaker 4: And so I think basically as all things with Trump,
Speaker 4: you know, anything can be a negotiation at the right price.
Speaker 4: It is consistent that Trump sees like revenue sources potentially
Speaker 4: for the US government in this but of course has
Speaker 4: been criticized by Vice President Mike Pence is former Vice
Speaker 4: president and others, not just Democrats. But this is pushing
Speaker 4: the US government too much into the realm of private business,
Speaker 4: and that we're really sort of headed to like a
Speaker 4: state run model in certain key sectors now more than
Speaker 4: that it has been palatable for Republicans in the past.
Speaker 2: This is The Big Take Asia from Bloomberg News. I'm
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