TikTok’s potential sale could be impacted by China’s updated export rules: Report

August 31, 2020 TH Author

China has updated its export control rules to require certain technology companies to gain licensing approval if they wish to sell technology to an American buyer, adding yet another wrinkle to the potential sale of TikTok’s US operations.

According to a New York Times report, the country’s official Xinhua news agency also published commentary which said TikTok’s parent company, ByteDance, could be required to gain a licence if it is to sell the technology to a US company.

The updated export rules reportedly add 23 items, including technologies such as personal information push services and artificial intelligence interactive interface technology, to the list of technologies that require licensing approval.

The changes to China’s export rules come less than a week after Kevin Mayar, TikTok’s former CEO, said in his resignation letter to staff that the company was expecting “to reach a resolution very soon”.

“In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for,” Mayar wrote.

“Against this backdrop, and as we expect to reach a resolution very soon, it is with a heavy heart that I wanted to let you all know that I have decided to leave the company.”

There are currently two main suitors for the 15-second video platform, Microsoft and Oracle.

Last week, there were reports Microsoft had teamed up with Walmart to be a potential suitor for TikTok’s US, Canadian, Australian, and New Zealand operations. Meanwhile, Oracle has reportedly been in preliminary talks about acquiring TikTok since mid-August.

All three companies are based in the United States.

The updated export rules, against the backdrop of US President Donald Trump’s executive orders that will ban TikTok in mid-September, puts both TikTok and its suitors in a pinch as Beijing may have the power to block the sale if a licence is not given.

United States President Donald Trump signed the executive orders at the start of the month, addressing what he has labelled as the threat posed by apps such as TikTok and WeChat.

The president called the pair of Chinese apps a “national emergency” with respect to the information and communications technology and services supply chain.

“TikTok automatically captures vast swaths of information from its users, including internet and other network activity information such as location data and browsing and search histories,” the first order said.

“This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information — potentially allowing China to track the locations of federal employees and contractors, build dossiers of personal information for blackmail, and conduct espionage.”

TikTok has clocked over 175 million downloads in the US, and around 800 million globally.

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