The status of a potential U.S.-owned TikTok

Summary

Marketplace Morning Report – “The Status of a Potential U.S.-Owned TikTok”

Date: September 26, 2025
Host: David Brancaccio
Guests: Kelly Cotter (Assistant Professor, Penn State), Olivia White (Director, McKinsey Global Institute)
Total runtime (main content): ~8 minutes

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Overview

This episode offers a concise briefing on the latest developments regarding TikTok’s ownership as the U.S. government pushes for an “Americanized” version of the app. Host David Brancaccio discusses the White House's executive action to shift TikTok’s U.S. operations under American control, and the potential implications for user data, algorithms, and foreign investment. Additional commentary focuses on U.S. trends in foreign direct investment (FDI) with guest Olivia White.

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Key Discussion Points & Insights

1. TikTok’s U.S. Ownership Shift – What’s Changing?

• Executive Order: President Trump has signed an executive order paving the way for American control of TikTok’s U.S. operations, circumventing a congressional ban.

  • Quote: “President Trump signed an executive order yesterday that paves the way for the short video and advertising company TikTok to be controlled by U.S. interests, avoiding Congress's ban.” (David Brancaccio, 01:04)

• Government Assurance: Vice President J.D. Vance underscores that U.S. investors will control TikTok’s algorithm, aiming to prevent foreign propaganda influences.

2. Ownership & Algorithm Questions

• Structure Explained:

  • A new ‘US-only’ TikTok app will be managed primarily by American investors (about 80% ownership), involving companies like Oracle and Rupert Murdoch’s corporation.
  • Chinese investors maintain a minority stake (less than 20%), retaining ties to ByteDance.
  • Quote: “There will be about an 80% share of US investors… and then a less than 20% share for Chinese investors who are already invested in ByteDance.” (Kelly Cotter, 02:05)

• Uncertainty About the Algorithm:

  • China’s stance means ByteDance cannot directly sell TikTok’s algorithm, raising questions about what the new U.S. entity will actually receive.
  • Possibilities range from transferring source code to developing a new, possibly altered system.
  • Metaphor: “It's not totally clear whether it's like do we get the recipe for the cake or do we get the cake to understand this better.” (Kelly Cotter, 02:39)

• Governance:

  • A U.S.-based board will oversee TikTok operations, but the selection process and board composition are yet to be determined.
  • The U.S. government’s claimed “finder’s fee” for facilitating the deal is unusual.
    • Quote: “...the interesting wrinkle that the US government is supposedly going to get something like a finder’s fee for orchestrating the negotiations here, which is quite atypical.” (Kelly Cotter, 03:08)

3. Data Privacy & Economic Context

• Data Collection Remains Central:

  • Despite ownership shifts, TikTok will continue collecting extensive user data to drive ad revenues, an industry-wide practice.
    • Quote: “There's a tremendous amount of data and that's the business that social media companies are in… so that they can advertise products to them and that's how they largely make their revenue.” (Kelly Cotter, 03:41)

• User Popularity:

  • TikTok’s dominance and popularity have contributed to delays and negotiations, despite a law mandating a ban.

• Economic Update:

  • Inflation is in line with forecasts; latest figures (ex-food and fuel): up 2.9% over the previous year.
  • Market snapshots:
    • Dow up 345 points (0.8%)
    • S&P up 0.5%
    • NASDAQ up 0.3%

4. Foreign Direct Investment (“FDI Shakeup”)

• Guest: Olivia White, McKinsey Global Institute

• FDI Trends:

  • FDI was stronger before the global financial crisis, dipped, and has recently ticked upward.
  • Greenfield FDI: Investors from one nation build productive capacity (e.g., factories, data centers) in another. Example cited: TSMC investing in Arizona for semiconductor fabs.
    • Quote: “Greenfield, foreign direct investment… is an investor from one country putting money into a different country to build productive capacity.” (Olivia White, 06:38)
  • FDI flows can transform entire industries—South Korea’s semiconductor boom and the global oil industry both relied on substantial foreign investment.
    • Quote: “There's a long history… of the role that Greenfield foreign direct investment has played in transforming industries and country economies over time.” (Olivia White, 08:23)

• Effect of Policy:

  • Despite shifting U.S. trade and investment policies, the volume of new foreign investments (“announcements stay steady, or even rise”) continues to climb as of May 2025, with the caveat of typically volatile patterns.

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Notable Quotes & Memorable Moments

• On the Algorithm Handoff:
  • “It's not totally clear whether it's like do we get the recipe for the cake or do we get the cake to understand this better right.”
    — Kelly Cotter (02:39)
• On Government “Finder’s Fee”:
  • “...the U.S. government is supposedly going to get something like a finder's fee for orchestrating the negotiations here, which is quite atypical.”
    — Kelly Cotter (03:08)
• On FDI Transforming Economies:
  • “There's a long history… of the role that Greenfield foreign direct investment has played in transforming industries and country economies over time.”
    — Olivia White (08:23)

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Timestamps for Important Segments

• [01:04] – U.S. Executive Order and TikTok ownership context
• [02:05] – Ownership structure breakdown by Kelly Cotter
• [02:39] – Uncertainty about algorithm transfer
• [03:08] – Governance and “finder’s fee” discussion
• [03:41] – Data collection practices
• [05:36] – Transition to discussion on foreign investment (FDI)
• [06:16] – Recent FDI trends in the U.S.
• [06:38] – Explanation and examples of Greenfield FDI
• [08:23] – FDI’s transformative power on economies

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Tone and Language

The episode maintains a brisk, journalistic tone, with David Brancaccio guiding conversations with a sense of urgency and relevance. Expert guests provide concise, accessible explanations, often using analogies. Quotes reflect the clarity and candor with which experts address uncertainty and complexity.

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Summary

If you missed the episode, this briefing captures the essence of business and policy developments shaping TikTok’s future in the U.S., underscores ongoing uncertainties about data and algorithm control, and situates the evolving narrative within the broader trends of foreign direct investment and economic change.

Transcript

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[David Brancaccio]

O.com how is this Americanized TikTok going to work? President Trump signed an executive order yesterday that paves the way for the short video and advertising company TikTok to be controlled by U.S. interests, avoiding Congress's ban. Here's Vice President J.D. vance Yester. What this deal ensures is that the American entity and the American investors will actually control the algorithm. We don't want this used as a propaganda tool by any foreign government. TikTok's owner, ByteDance of China, has not acknowledged that this transaction is taking place. For some insight, let's turn to Kelly Cotter, assistant professor of information sciences and Technology at Penn State. Professor, thanks for joining us.

[Kelly Cotter]

Thanks for having me.

[David Brancaccio]

We have to rely on the Trump administration narrative here because we haven't heard from TikTok's owner, ByteDance, on this, and Chinese officials have been, I will say, vague. Under this plan, what part of TikTok would get managed by whom?

[Kelly Cotter]

So under this plan there would be a new US only app that would be managed largely by US owners. So there will be about an 80% share of US investors, including Oracle, Rupert Murdoch's company and some others, and then a less than 20% share for Chinese investors who are already invested in ByteDance.

[David Brancaccio]

We should understand that China won't let ByteDance sell the prized TikTok algorithm. So I guess it's a new algorithm. I guess it could be the same, better or worse. Who would figure that out?

[Kelly Cotter]

It's not totally clear what this looks like in practice. So it could be something like maybe bytedance hands over the source code or maybe it's sort of the whole system that gets handover. It's not totally clear whether it's like do we get these the recipe for the cake or do we get the.

[David Brancaccio]

Cake to understand this better right. There'd be a US based board overseeing the Americanized TikTok. And you know, who gets on the board and who chooses who gets on the board is something to watch.

[Kelly Cotter]

Absolutely. And then there's also some the interesting wrinkle that the US government is supposedly going to get something like a finder's fee for orchestrating the negotiations here, which is is quite atypical.

[David Brancaccio]

TikTok is extraordinarily popular even though there's this law that directed that they pull the plug unless it's been delayed in part because of its popularity. But it is a system that like so much social media, gathers a lot of data on the people that use it.

[Kelly Cotter]

It does. There's a tremendous amount of data and that's the business that social media companies are in and sort of understanding through data what their users preferences are so that they can advertise products to them and that's how they largely make their revenue.

[David Brancaccio]

Penn State's Kelly Cotter there there's news. Inflation went up in line with forecasts in August. Prices are up 2.9% in the year through August when food and fuel prices are ignored the way our central bankers prefer. The Dow is up 345 points 8. 10%. The S&P is up 5. 10 of a percent. The NASDAQ is now up 3. 10.

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[David Brancaccio]

After the big immigration raid at a South Korean car battery factory under construction in Georgia, President Trump went on to emphasize that he's still big on foreign investment in the US if workers that come with that have proper papers. Let's get a snapshot on the state of what's called foreign direct investment by turning to Olivia White, director at the McKinsey Global Institute and co author of a new report on what is labeled the FDI shakeup. Olivia, great to reconnect.

[Olivia White]

Likewise. Thanks, David.

[David Brancaccio]

All right. This kind of investment that countries, especially in the United States these days, really want, it had been booming, I guess. Is that a way to describe what the situation had been?

[Olivia White]

Well, depends on sort of how far ago. Yeah, but fdi, look, FDI was stronger before the global financial crisis went into a little bit of a lull. But our work actually suggests that over the past couple of years, if anything, it's gone up a little bit again.

[David Brancaccio]

How should we understand foreign direct investment? Like give me an example so that everyone is crystal clear.

[Olivia White]

Yeah, and I'm going to give you an additional word to throw in there. So, Greenfield, foreign direct investment. And you should understand that as an investor from one country putting money into a different country to build what we call productive capacity. So think about a factory or a data center. So, for example, TSMC committing to invest money and then in fact, investing money in Arizona to build, for example, semiconductor fabs.

[David Brancaccio]

TSMC based in Taiwan. Right?

[Kelly Cotter]

That's right.

[David Brancaccio]

All right. So I mean, we're speaking at a time that trade in goods, things is being reshaped, overhauled, I don't know, redirected, curtailed by Trump administration policies? What can you tell us about how the flow of money to invest in projects in the US Fresh projects. Has it been affected by the way that we're recasting our trade relationships?

[Olivia White]

Well, look, let me start with just the comment that this kind of investment is historically very volatile. So you typically want to look at more than a couple of months to make judgments about patterns. You know, what we do is we look at a sort of annualized level of flow since 2022, and we look at that through May of 2025. In our analysis, numbers have gone up into the US and in fact, if you just look at the first five months, numbers have gone up even a little bit more. But with my caveat. So at least so far, we are seeing announcements of such investment stay steady.

[David Brancaccio]

Or even rise in this type of investment, where the investment flows across borders. I mean, it can change an entire country's economy, entire industries. I think you highlight South Korea. I mean, where did that semiconductor industry. It wasn't just its own capital.

[Olivia White]

Sure. Yeah. No, I mean, there's a long history, actually of the role that Greenfield foreign direct investment has played in transforming industries and country economies over time. You talk about South Korea and the advent of the semiconductor industry there over multiple, multiple decades. But gosh, go back and think about the way that the oil industry actually first originated. That all came out of FDI in the late, late 1880s and for multiple decades. So, yeah, it can really transform global industries and country economies.

[David Brancaccio]

Olivia White is director at the McKinsey Global Institute. The new report is called the FDI Shakeup. Thank you so much.

[Olivia White]

Pleasure to talk. Thank you, David.

[David Brancaccio]

And from Los Angeles, I'm David Brancaccio. It's the Marketplace Morning Report from APM American Public Media. Hey, David Brancaccio here. Big news. Half priced hoodie weekend is back. That means this weekend only you can get a Marketplace zip up hoodie when you donate $10 a month or more, support public service journalism and pick up a cozy new hoodie just in time for the cooler weather. Get yours before this deal ends at midnight Sunday. What you do is go to marketplace.org donate.