What TikTok’s New U.S. Deal Means for Business, Tech and Trust

As concerns around data privacy and national security continue to shape the global technology landscape, TikTok has taken a major step to maintain its presence in the United States. A newly finalized deal establishing a U.S.-based entity aims to address longstanding concerns about foreign access to American user data, but the move raises an important question: Does the restructuring truly solve the problem, or simply reshape it?

From a cybersecurity standpoint, the issue has always centered on control.

Nick Simmons, an adjunct professor in Baylor’s Online MBA (OMBA) program and vice president of sales and partnerships at LevelBlue, explains that the primary concern was a lack of visibility into how user data was being handled under TikTok’s previous structure.

“I see the main concern being tied to the lack of visibility and control,” Simmons said. “U.S. policy requirements are vastly different. The previous structure would have opened the door to data privacy concerns as well as significant challenges to maintain confidentiality and integrity.”

The restructuring introduces a U.S.-based framework, including storing American user data on infrastructure managed by Oracle. Simmons believes this shift represents a meaningful improvement. 

“The restructure is certainly a significant reduction due to the data being stored in U.S.-based infrastructure,” he said. “This was a critical component to enabling the deal to finalize.”

Still, he cautions that risk has not been eliminated, only transformed. 

“Vulnerabilities will always exist, just in a different form,” Simmons said. “U.S.-based infrastructure will still need to be diligent in policies and procedures to keep information and applications secure.”

Data localization plays a central role in this new structure. By storing information domestically, organizations gain greater control over how data is monitored and protected. 

“This step drastically narrows the surface and helps mitigate from a control perspective,” Simmons said. “The ability to monitor, audit, define and drive accountability is significantly improved.”

However, separating U.S. user data from a global platform presents ongoing technical challenges. Maintaining performance while enforcing stricter access controls requires teams to operate in more isolated environments.

“Maintaining the app’s performance will continue to be an ongoing challenge,” Simmons said. “Teams will be forced to adhere to new policies and procedures while working in separate silos, restricted from each other’s code access and repositories.”

Beyond data storage, questions also remain around TikTok’s recommendation algorithm – the engine behind its success. While discussions around retraining the algorithm on U.S. data have emerged, Simmons notes the complexity of such efforts. 

“This is tied to interoperability – allowing U.S. users to access content without sharing data,” he said. “This is a significant challenge.”

While the agreement may signal a new path forward, Simmons believes its broader implications are uncertain. 

“This agreement sets a precedent focused on controlling data integrity, confidentiality and availability,” he said. “But the highly political nature of this deal would be difficult to repeat at scale.”

While policymakers focus on security, businesses and marketers are watching closely as TikTok continues to serve as a dominant platform for consumer engagement.

Ann Mirabito, professor of marketing in Baylor’s OMBA program, says the platform has evolved far beyond its early perception as an experimental channel.

“TikTok has moved from being an experimental channel to a core platform for brand discovery, especially among younger consumers,” Mirabito said. “In many categories, TikTok now sits alongside Instagram and YouTube as a primary – not secondary – channel.”

The restructuring may actually strengthen the platform’s position in the eyes of marketers.

“For some organizations, particularly those in regulated industries or with strict data governance policies, uncertainty has been a barrier to investment,” Mirabito said. “Greater transparency and U.S.-based oversight could reduce perceived risk and unlock additional ad spend.”

At the same time, increased oversight introduces new considerations. While improved governance can enhance brand safety, it may also influence how content is moderated and experienced by users. 

“Increased oversight is a double-edged sword,” Mirabito said. “Trust is less about regulation itself and more about whether the user experience – and engagement – remains strong.”

That user experience is driven largely by TikTok’s recommendation algorithm, which determines what content surfaces and how quickly it spreads. Even subtle changes to how content is distributed could have significant implications. 

“If changes to governance affect how content is surfaced, even subtly, it could have outsized effects on virality,” Mirabito said. “The algorithm rewards resonance, not just reach.”

Beyond technical performance, the algorithm also raises broader questions around content visibility and influence. Concerns around whether certain viewpoints could be suppressed or amplified under different ownership structures have surfaced in recent years, echoing debates seen on other platforms. At the same time, increasing global scrutiny of social media – including proposed bans for teenagers in countries like the U.K. and France – raises a larger question of whether stricter regulation could eventually extend to platforms like TikTok in the U.S.

These shifts in visibility, governance and regulation also extend to the platform’s creator ecosystem, which plays a central role in its success. Creators are highly responsive to changes in visibility, monetization and platform stability.

“If governance changes lead to shifts in payouts, visibility or content guidelines, creators will adapt quickly,” Mirabito said. “The bigger risk for TikTok is not losing creators entirely, but losing their most engaged or highest-quality contributors.”

Looking ahead, Mirabito expects TikTok to continue expanding its role in the marketing landscape.

“We’re already seeing it evolve from an entertainment platform into a full-funnel marketing channel,” she said. “The key question is not whether TikTok remains important – it’s how brands adapt to a model where discovery, evaluation and conversion increasingly happen within the same platform.”

Together, these perspectives highlight the broader tension at the center of TikTok’s restructuring. While the new U.S. framework may address certain security concerns, it also introduces new technical, operational and strategic challenges.

Ultimately, the platform’s future may depend on its ability to strike a balance – maintaining trust with regulators while preserving the features that made it one of the most powerful tools for digital discovery and engagement.

Hear from Baylor Online MBA students as they discuss TikTok, user data and transparency.

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