ByteDance, the Chinese company behind TikTok, is expected to retain roughly half of the profits generated by TikTok's U.S. operations (TikTok USA) even if it transfers more than half of its stake to American investors, Bloomberg reported on September 26, 2025. According to sources, ByteDance will receive licensing fees for providing its algorithm to TikTok USA, in addition to a share of profits proportional to its equity stake. This structure could allow ByteDance to secure over 50% of the total profits, even if it relinquishes control of the company.Even after transferring management control to U.S. investors, TikTok USA will continue to use ByteDance’s algorithm.
Sources indicate that ByteDance could receive 20% of the revenue generated by TikTok USA through the use of this algorithm. Additionally, ByteDance will receive a portion of profits from other TikTok USA revenue streams based on its equity share.On September 25, 2025, U.S. President Donald Trump signed an executive order allowing American investors to acquire TikTok’s U.S. operations. Under the deal, ByteDance will hold a 19.9% stake in TikTok USA.
Bloomberg noted that this profit-sharing structure explains why TikTok USA’s valuation was lower than analysts’ initial expectations. U.S. Vice President J.D. Vance stated the previous day that TikTok USA was valued at $14 billion (approximately 20 trillion KRW), significantly below the $35 billion to $40 billion projected by analysts.
Ashwin Binwani, founder of Alpha Binwani Capital, described the $14 billion valuation as potentially “the most undervalued tech acquisition of the decade,” estimating it to be only about one-third of TikTok’s true value. The remaining 80% of TikTok USA’s shares will be held by a U.S.-led consortium, with U.S. software and cloud company Oracle, investment firm Silver Lake, and Abu Dhabi-based investment firm MGX each holding a 15% stake.
However, Bloomberg reported that discussions between ByteDance and the acquisition consortium regarding specific terms of the deal are still ongoing, and the extent of progress toward a final agreement remains unclear.Source:
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