TikTok’s algorithm has returned to the spotlight after Byte Dance signed agreements to form a joint venture. This move hands the operational management of TikTok’s U.S. app to a consortium of global investors, including Oracle.
The creation of this new entity marks a significant step toward avoiding a U.S. ban and easing tensions between Washington and Beijing.
However, questions remain regarding the exact ownership and licensing of the recommendation algorithm.
According to Rush Doshi, formerly of the National Security Council, it remains perplexing whether the algorithm has been transferred, licensed or was owned by Beijing, even with Oracle providing continuous monitoring and oversight.
According to Reuters, the joint venture will support operations, handling both the recommendation algorithm and American user data.
The sources noted a distinct segmentation in the deal: while the U.S. entity manages security, ByteDance- affiliated units oversee global commercial activities, such as e-commerce and advertising.
These arrangements formed the deal contours announced on Thursday, as two sources with knowledge of the matter told Reuters on Friday.
While ByteDance controlled entities will manage income-generating activities such as advertising and e-commerce, the new joint venture will provide the underlying technology and secure data services.
The analyst's prediction demonstrated that it is not just the algorithms, but their strategy with the video content, that has driven TikTok’s international success.
TikTok demonstrated that an internet-based algorithm underscores can be a more powerful driver of engagement than traditional social networks.
The short-form format enables TikTok’s algorithm to be more powerful, allowing it to track changes in user’s preferences and interests over time.
TikTok’s initial entry into the short video platform market also gave the company a first mover advantage and a dominant share of the short-video sharing platform market.
TikTok further explained that recommending content from outside a users’ immediate socialism circle is a feature management describes as crucial to the user experience.
A report was published last year which showed that TikTok’s algorithm dedicates 30% to 50% of recommendation videos to test new user interests.
Nonetheless, the research findings claimed that the TikTok algorithm aims to recommend a large number of diverse videos to better infer user interests; it aims to maximize retention by introducing content that currently falls outside a user’s established preferences.
