New China Export Rule Could Jeopardize TikTok U.S. Sale

The Chinese government has added artificial intelligence technologies including ‘personalized content recommendation’ tools to its export control list, a move that could potentially jeopardize the pending sale of TikTok’s U.S. operations, Nikkei Asian Review reported first.

China’s Ministry of Commerce, on Friday, released an updated export control list that included “personalized content recommendations based on data analysis” and a number of other technologies, restricting exports both for military and civilian purposes.

While Beijing’s order does not explicitly mention TikTok, one of the app’s key features— recommending personalized videos— is based on an algorithm that might fall under the restricted category.

It is unclear when the new restrictions will go into effect but TikTok’s Beijing-based parent ByteDance is reportedly trying to finalize its sale in the U.S. as early as this weekend.

While President Donald Trump has repeatedly insisted that according to his August 6 order ByteDance has till September 15th to sell TikTok, a second executive order issued by Trump on August 14 gives TikTok and ByteDance 90 days from the signing of the order to divest its U.S. operations, pushing the deadline beyond the U.S. presidential elections.

TikTok presently shares technical resources including its user interface and some software code with Douyin, an identical Chinese variant of the app that is walled off from the rest of the world, and the new Chinese order may add additional complications to their separation.

China’s actions follow several trade-related sanctions issued by the Trump administration against Chinese tech firms including Huawei, which severely limits their access to chips made using U.S. technology.

Key Background

Oracle is competing with a joint bid from Microsoft and Walmart to acquire TikTok’s U.S. operations after the White House threatened to ban the app for allegedly sharing sensitive user data with Chinese authorities. Earlier this week, TikTok CEO Kevin Mayer announced his exit from the company, just months after taking charge. According to a report by the Financial Times, Mayer had not anticipated the extent to which TikTok would become involved in tensions between China and the U.S. when he took over in June.

A TikTok spokesperson told CNN Business that they respected his decision since the “political dynamics of the last few months” had significantly changed the scope of Mayer’s role. On Monday, TikTok had filed a legal challenge against the president’s executive order banning U.S. transactions with the video-sharing platform and its owner ByteDance.

While the official communication from the Chinese government on Trump’s threat to ban TikTok has been limited, China’s state-controlled media has been vocal about its displeasure on the issue. Earlier this month, a strongly-worded editorial on China Daily noted “China will by no means accept the ‘theft’ of a Chinese technology company, and it has plenty of ways to respond if the administration carries out its planned smash and grab.”

Siladitya Ray

 Siladitya Ray

I am a Breaking News Reporter at Forbes, with a focus on covering important tech policy and business news. Graduated from Columbia University with an MA in Business and Economics Journalism in 2019. Worked as a journalist in New Delhi, India from 2014 to 2018. Have a news tip? DMs are open on Twitter @SiladityaRay or drop me an email at siladitya@protonmail.com.

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