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

FILE PHOTO: China and U.S. flags are seen near a TikTok logo in this illustration picture taken July 16, 2020. REUTERS/Florence Lo/Illustration/File Photo

BEIJING/SHANGHAI – China’s new rules around tech exports mean ByteDance’s sale of TikTok’s U.S. operations 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 President Donald Trump to divest short video app TikTok – which is challenging the order – in the United States amid security concerns over the personal data it handles.

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

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

“If ByteDance plans to export related technologies, it should go through the licensing procedures,” Cui said in an interview with Xinhua published on Saturday.

ByteDance said on Sunday it noted the Friday revisions to China’s technology exports list and that it would strictly abide by the rules when dealing with related matters, according to a statement it posted on its official account on Jinri Toutiao, a news aggregator app it owns.

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 technology – to the restricted list.

It can take up to 30 days to obtain preliminary approval to export the technology.

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

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

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.

Reuters

August 30, 2020

Reporting by Tom Daly and Zoey Zhang; additional reporting by Yingzhi Yang; Editing by Sam Holmes and David EvansOur Standards:The Thomson Reuters Trust Principles.

https://in.reuters.com/article/usa-tiktok-china/chinas-new-tech-export-controls-could-give-beijing-a-say-in-tiktok-sale-idINKBN25Q05M

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