Tiktok owner Bytedance said Sunday it will “strictly comply with” a Chinese technology export regulation, which was updated last week to ban the export of limited technologies, potentially including those used by the popular video-sharing app.
Why it matters: The development adds a new twist to Bytedance’s negotiations with the American companies that want to buy Tiktok’s US operations, including Microsoft, Oracle, and Walmart.
- The deal will have to be reviewed by China’s commerce and technology ministries if any technology used by Tiktok is deemed to be limited.
Details: Bytedance said Sunday on its social media account that it will strictly adhere to (in Chinese) the revised Catalog of Prohibited or Restricted Export Technologies when handling technology export-related businesses.
- On Friday, China’s Ministry of Commerce and Ministry of Technology added (in Chinese) 23 items to the Catalog of Prohibited or Restricted Export Technologies.
- Two significant additions include items which directly translate into “personalized information push service based on data analysis” and “artificial intelligence interactive user interface,” both of which bear resemblance to proprietary technologies used on the Tiktok platform.
- Tiktok, which was ordered by the US President Donald Trump to sell its US operations by mid-September, is known for its artificial intelligence and deep-learning algorithms (in Chinese) that deliver personalized content to its users.
Between the lines: At present, it is unclear if the Tiktok sale in the US is subject to review by the two ministries. However, the catalog has not been revised for 12 years, signaling that the Chinese government could be looking to interfere with Tiktok’s forced sale.
- Companies must seek approval from the two ministries before exporting limited technologies and the decision-making process can take up to 30 days, according to a set of technology export regulations the State Council issued (in Chinese) in 2001.
- Cui Fan, a professor specializing in international trade compliance at the University of International Business and Economics in Beijing, told state-owned news agency Xinhua on Saturday that the changes could apply to Tiktok.
- “Bytedance should apply for licenses if it wants to export related technologies,” Cui said, adding that whomever the new owner of Tiktok will be, it will have to import the technologies used in Tiktok.
- “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,” Erich Andersen, Bytedance’s general counsel, said in a statement sent to TechNode on Monday.
Context: Trump signed an executive order on Aug. 6 banning “any transaction” between any person or company under US jurisdiction and Bytedance starting Sept. 15. On Aug. 14, he updated the order to require Bytedance to either sell or spin off Tiktok’s US operations within 90 days.
- Current suitors of Tiktok’s US operations include Microsoft, which teamed up with retail giant Walmart, as well as software maker Oracle. CNBC reported that the deal could range from $20 billion to $30 billion.
- The Wall Street Journal reported Sunday that talks between Bytedance and suitors for Tiktok’s US operations slowed over the weekend because of the new changes in Chinese regulation.