China’s revised tech export controls could give Beijing a say in TikTok sale

China has added 23 new items of technologies restricted for export, including personal information push services and artificial intelligence interactive interface
Beijing has said that it opposes the Trump administration’s executive orders directed at TikTok

TikTok

Reuters

Published: 3:35pm, 30 Aug, 2020

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China’s revised rules around technology exports mean ByteDance’s sale of TikTok’s US operation could need Beijing’s approval, a Chinese trade expert told state media, a requirement that would complicate the forced and politically charged divestment.

ByteDance has been ordered by US President Donald Trump to divest short video app TikTok – which is challenging the order via a lawsuit – in the US amid security concerns over the personal data it handles.

Walmart and Microsoft Corp as well as Oracle Corp are among the suitors for the assets, which also includes TikTok’s Canada, New Zealand and Australia operations.

China, however, late on Friday revised a list of technologies that are banned or restricted for export for the first time in 12 years. Cui Fan, a professor of international trade at the University of International Business and Economics in Beijing, said the changes would apply to TikTok.

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“If ByteDance plans to export related technologies, it should go through the licensing procedures,” Cui said in an interview with Xinhua published on Saturday. It can take up to 30 days to obtain preliminary approval to export technology under China’s procedures.

China’s Ministry of Commerce added 23 items – including technologies such as personal information push services based on data analysis and artificial intelligence interactive interface – to the restricted list.

TikTok’s secret weapon is believed to be its recommendation engine that keeps users glued to their screens. This engine, or algorithm, powers TikTok’s “For You” page, which recommends the next video to watch based on an analysis of your behaviour.

Cui said ByteDance’s development overseas had relied on its domestic technology that provided the core algorithm, indicating that the company may need to transfer software codes or usage rights to the new owner of TikTok from China to overseas.

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“Therefore, it is recommended that ByteDance seriously study the adjusted catalogue and carefully consider whether it is necessary to suspend” negotiations on a sale, he said.

ByteDance did not immediately respond to a request for comment on Sunday.

China’s foreign ministry has said that it opposes the executive orders Trump has placed on TikTok and that Beijing will defend the legitimate rights and interests of Chinese businesses.

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