BEIJING / SHANGHAI (Reuters) – New Chinese rules on technology exports mean that the sale of TikTok’s US operations by ByteDance may require Beijing’s approval, a Chinese state media trade expert said. This requirement would complicate forced and politically charged divestitures.
COMPREHENSIVE PHOTOS: TikTok logos are visible on smartphones in front of the ByteDance logo displayed in this illustration from November 27, 2019. REUTERS / Dado Ruvic / Illustration
ByteDance has been ordered by President Donald Trump to abandon the short video application TikTok in the United States, which challenges the order, due to security concerns regarding its personal information.
Microsoft Corp (MSFT.O) and Oracle Corp (ORCL.N) are among the assignees of these assets, which also include TikTok’s operations in Canada, New Zealand and Australia.
However, late on Friday, China revised a list of technologies whose exports have been banned or restricted for the first time in 12 years, and Cui Fan, a professor of international trade at Beijing University of International Trade and Economics, said the changes would affect TikTok.
“If ByteDance plans to export related technologies, it should go through licensing procedures,” Cui told Xinhua on Saturday.
The Chinese Ministry of Commerce has added 23 items to the limited list – including technologies such as personal information services based on data analysis and interactive artificial intelligence interface technology.
It can take up to 30 days to obtain prior approval to export technology.
TikTok’s secret weapon is considered to be a recommendation engine that keeps users glued to their screens. This tool or algorithm supports TikTok’s “For You” page, which, based on an analysis of your behavior, recommends another video that you want to watch.
Cui noted that ByteDance’s overseas development relied on its home technology, which provided the main algorithm, and said it might be necessary to transfer software codes or usage rights for the new owner of TikTok from China overseas.
“Therefore, it is recommended that ByteDance seriously study the revised catalog and carefully consider whether it is necessary to suspend sales negotiations,” he added.
ByteDance did not respond immediately to a request for comment on Sunday.
China’s foreign ministry has said it is opposed to executive orders issued by Trump on TikTok, and that Beijing will defend the legitimate rights and interests of Chinese businesses.
Tom Daly and Zoey Zhang’s coverage; more news from Yingzhi Yang; Editor: Sam Holmes