Jessica Goodfellow
Aug 31, 2020

TikTok's sale plans could be hampered by new Chinese export rules

US-China tensions escalate as Beijing rolls out restrictions on technology exports that could hamper TikTok's government-mandated US sale.

TikTok's sale plans could be hampered by new Chinese export rules

New restrictions imposed by the Chinese government on the export of technology could hamper ByteDance's plans to sell off parts of TikTok's international business.

Beijing on Friday (August 28) updated, for the first time since 2008, the list of technology exports that are banned or restricted. Artificial intelligence technologies such as voice and text recognition, and those that analyse data to make personalised content recommendations were among the 23 items added to the revised list. TikTok employs both of those technologies to power its short-video app.

Businesses that operate technologies covered by the list are required to seek permission from the Ministry of Commerce before transferring overseas. The Ministry then has 30 days to decide whether to greenlight the export.

This could throw a spanner in ByteDance's race to find a buyer for TikTok's US operations within President Trump's November 12 deadline. Indeed, China's rolling out of the new restrictions appears to be specifically timed to delay or prevent the US sale.

The US president issued two executive orders against the popular video app at the beginning of August, ultimately giving parent company ByteDance 90 days to divest its US business over "national security" concerns related to its Chinese ownership.

In retaliation, TikTok sued the US government last week (August 24), accusing the Trump administration of a "lack of due process" and paying "no attention to facts".

ByteDance general counsel Erich Andersen said in a statement: "We are studying the new regulations that were released Friday. As with any cross-border transaction, we will follow the applicable laws, which in this case include those of the US and China."

Tech giants Microsoft and Oracle are thought to be the frontrunners to takeover TikTok's US business. Microsoft was the first to enter talks with TikTok, and is eyeing other geographies including Canada, New Zealand and Australia to be included in the acquisition. Retail conglomerate Walmart joined Microsoft's bid last week. Centricus Asset Management and rival short-video app Triller were said to have submitted a last-minute bid on Friday, although TikTok said over the weekend it had not received an offer.

TikTok's US-based global CEO Kevin Mayer resigned last week, citing political pressure over recent weeks and the impact this will have on his role.

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