TikTok: China’s new export rules mean quick sale of video app ‘unlikely’

A quick sale of TikTok’s US operations is unlikely as China’s new rules around tech exports mean Beijing can determine the fate of a deal

ByteDance can continue talks with buyers and skip government approval by excluding sensitive technology, such as its algorithm, sources say

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China’s new tech export rules mean the sale of TikTok’s US operations require approval from Beijing. Photo: AFP

Published: 1:13pm, 2 Sep 2020Updated: 4:10pm, 15 Oct 2020

Beijing’s updated export control list offers it plenty of leeway to determine a possible sale of TikTok’s overseas operations, adding a powerful new player in the fight for control of the popular video-sharing app, according to sources from the Chinese government and the company’s owner ByteDance.

A quick deal to sell TikTok in the United States is now unlikely, as the new regulations give Beijing the power to review and veto the export of technologies, increasing the odds it will cease operations in the US like it was forced to do in India, said a ByteDance official, who was briefed on discussions about the impact of the new rules.

ByteDance has said it will “strictly comply” with the new rules around tech exports released by the Ministry of Commerce and Ministry of Science and Technology at the weekend. It is the first time the controls, which cover TikTok’s algorithm, have been updated for more than a decade.

“ByteDance will have to go through the approval process in China as the TikTok deal in the United States involves transferring of such technologies,” said the company source, who declined to be identified.

The Chinese government will have an important say in the deal … by blocking or delaying the process, which means a quick deal is very unlikely to take place.

ByteDance source

“The Chinese government will have an important say in the deal … by blocking or delaying the process, which means a quick deal is very unlikely to take place.”

ByteDance could continue talks with potential buyers of TikTok and technically skip the government approval by excluding sensitive technology transfers in any deal, said a government source.

“In other words, ByteDance can sell all of TikTok but the algorithms,” said the source, who is involved in regulating ByteDance but not directly involved in technology export control.