China export update could halt TikTok sale to Microsoft or Oracle
Beijing has made a last-minute move to prevent one of its biggest success stories falling into the hands of its rival. And time is running out.
Time is running out for the viral video app TikTok to be sold or face being banned from the biggest market it operates in, but it has just had a spanner thrown in the works.
China updated export rules on Friday, expanding them to cover sensitive technology.
The next day its state media agency published an article featuring commentary from China University of International Business and Economics Professor Cui Fan, warning ByteDance might need a licence from the Chinese government in order to sell TikTok to an American company.
“For technology exporters who have not completed the transaction when the new catalogue takes effect, if they plan to export restricted technologies in the adjusted catalogue, it is recommended to suspend the negotiation and trade procedures and fulfil the relevant application procedures,” Prof Cui Fan told Xinhua.
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TikTok’s potent recommendation algorithm, which many credit for the app’s success, is likely covered under Articles 21 and 18 of the updated catalogue, which notes “personalised information push service technology based on data analysis” and “artificial intelligence interactive interface technology”.
An executive order that TikTok has vowed to challenge in US courts has called for the app to be sold to an American company if it wishes to continue operating there, over fears about the Chinese parent company’s links to the Chinese Communist Party.
TikTok doesn’t operate in China, but an almost identical app called Douyin does.
The app has already been banned from India, meaning the United States is its biggest potential market (and already is).
Microsoft and Walmart (surprisingly) have joined together to bid for the app, competing against a rival consortium of potential investors led by enterprise software giant Oracle.
According to The New York Times, the updated catalogue, as well as the commentary in state-media signal “China’s intention to dictate terms over a potential deal”.
Both Microsoft and Oracle have considerable ongoing operations in China as well.
Chinese officials have accused the Trump administration of “bullying” TikTok.
US Centre for Strategic and International Studies senior adviser Scott Kennedy told the NYT thechange to the export rules was at the very least a “kneejerk assertion of sovereignty” from China.
“At a minimum they’re flexing their muscles and saying: ‘We get a say in this and we’re not going to be bystanders,’” Mr Kennedy said.
“It could be an effort to outright block the sale, or just raise the price, or attach conditions to it to give China leverage down the road,” he said, adding that at least China and the US appeared to be in agreement that ByteDance was a national security priority.
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