Updated China Law Could Further Complicate TikTok’s US Sale
TikTok’s chaotic U.S. sale negotiations may be about to get more complicated. In the latest 11th-hour twist, China has updated its list of technologies (via Nikkei) that are subject to export restrictions to add “recommendation of personalized information services based on data.”
The list, which was last refreshed more than a decade ago in 2008, also includes technologies that are deemed sensitive such as voice recognition and computer chips. Chinese companies that seek to sell any of these technologies to a foreign bidder must acquire a license from the government.
While the amendment doesn’t directly confirm it will throw a wrench in Bytedance’s attempt to sell TikTok to an American owner before it’s banned, its timeline and details do potentially suggest it might be rolled out for that exact purpose.
In addition, on August 29th, a state-backed Chinese news agency published comments from Cui Fan, a professor at the China University of International Business and Economics and a government trade advisor, who, based on translations of the Chinese text, said: “if ByteDance plans to export related technologies, it should go through the licensing procedures.”
In a statement, Bytedance’s General Counsel Erich Andersen told Digital Trends the company is “studying the new regulations” and it will “follow the applicable laws.” “As with any cross-border transaction, we will follow the applicable laws, which in this case include those of the US and China,” he added.
We’ve reached out to Microsoft and Oracle, two of the reported front runners for a TikTok acquisition and we’ll update the story when we hear back.
TikTok’s recommendation engine is its cornerstone and one of the key drivers behind the video app’s viral rise across the world. The algorithm takes advantage of heaps of data and watching habits to accurately suggest you content even if you don’t directly follow any creators.
It’s unclear how this updated law will impact TikTok if it does at all. The deal, whenever it’s in its final stages, could simply end up under heavy scrutiny from Chinese officials who may primarily study its both civilian and military effects. Whether it has political agendas and will deliberately thwart the acquisition from going through remains to be seen.
Earlier this month, in an editorial, the state-backed paper, China Daily called Trump administration’s executive order an act of “bullying.” China has “plenty of ways to respond if the administration carries out its planned smash and grab”, it added.
On August 24th, TikTok filed a lawsuit against the executive order stating the ban had the potential to “strip the rights” of the employees and creators “without any evidence to justify such an extreme action.” Three days later, the company’s CEO, Kevin Mayer resigned.