China threatens to thwart TikTok sale as it tightens export restrictions

31-Aug-2020 Intellasia | The Telegraph | 8:58 AM Print This Post

China could step in to block the sale of TikTok’s US operations after Beijing gave itself new powers to restrict technology exports which are believed to cover the popular video app.

The Chinese government updated its restrictions on technology exports for the first time in 12 years, just days before TikTok’s Beijing-based owner ByteDance was due to confirm a sale of the app. State media quoted a Chinese professor and government adviser saying the new rules would mean ByteDance requiring a licence to sell TikTok.

ByteDance is racing to finalise a sale of TikTok’s US business, with bidders including a Microsoft-Walmart coalition and a consortium led by business software giant Oracle. Donald Trump has issued an executive order saying if TikTok is not sold by September 15, the app will be banned.

While the White House has said the app’s Chinese ownership is a national security threat, Beijing has been relatively silent on the matter until now. Its late intervention threatens to complicate or halt any sale of the app, which is likely to be worth more than $20bn (GBP 15bn).

“If ByteDance plans to export relevant technologies, it should go through the licensing procedures,” Cui Fan, a professor at Beijing’s University of International Business and Economics and an adviser to China’s Ministry of Commerce, told state media outlet Xinhua. “It is recommended that ByteDance seriously study the adjusted catalogue, and carefully consider whether it is necessary to suspend the substantive negotiation of related transactions, perform the legal declaration procedures and then take further actions as appropriate.”

China’s Ministry of Commerce updated its export restrictions on Friday, saying technologies such as certain artificial intelligence systems are now covered.

One of TikTok’s crucial technologies, an advanced algorithm used to recommend videos, is likely to be covered by the restrictions. It could mean TikTok’s business being sold without key technologies, or potentially a sale being blocked completely.

Erich Andersen, ByteDance’s general counsel, said: “We are studying the new regulations that were released Friday. As with any cross-border transaction, we will follow the applicable laws, which in this case include those of the US and China.”

A sale of TikTok’s operations in the US, Canada, New Zealand and Australia was due to be announced as early as this week. As well as the Microsoft and Oracle-led bids, London-based fund manager Centricus has reportedly offered to buy it with US TikTok rival Triller. TikTok’s UK and Europe business is not believed to be part of the bidding.

https://sg.news.yahoo.com/china-threatens-thwart-tiktok-sale-165045894.html

 

Category: China

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