China’s new rules may stop deals to buy TikTok US operations

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Trump’s deadline for TikTok to divest its US operations is closing in. But the Chinese government has another thing in mind. It has set new rules that may affect TikTok’s plans, as China enforces limits on the export of proprietary technology.

China’s new rules limits sharing of technological advancements within international deals, The Wall Street Journal reports.

“The new restrictions, unveiled Friday by China’s ministries in charge of commerce and science and technology, cover such computing and data-processing technologies as text analysis, content recommendation, speech modeling and voice-recognition. Technologies on the list can’t be exported without a license from local commerce authorities,” the WSJ said.

Even if Beijing-based TikTok owner ByteDance proceeds with the sale, limitations on its algorithms and back-end processes will be in place. And these technologies help make TikTok tick. 

Reports estimated the TikTok partial buyout to involve 15 million lines of code. ByteDance would need to cut these off to separate the app.

Microsoft may reconsider its $30 billion bid if this is the case. 

The algorithm is the product

The strength of TikTok is its sharing algorithm. It allows any user to go viral with any short-form video. And it focuses on each individual upload—not a previous clip’s performance or audience size.

The algorithm motivates people to take a shot and tap into rising trends. TikTok clips can reach beyond your own network of friends and family as well.

The White House announced last month its ultimatum for the app. And reports said that China’s ruling party was unhappy with Trump’s administration for forcing the sale of a Chinese-owned business.

“Plans for Chinese streaming app TikTok to sell its U.S. operations amid regulatory headwinds there have elicited outrage in China, with Beijing threatening repercussions if the deal goes through,” the Nikkei Asian Review reports.

China may have found the right way to stop the divesture. But we have yet to see if this will stop the ongoing negotiations of the partial buyout. The WSJ says that neither ByteDance nor China’s Ministry of Commerce have replied to requests for comment.

A TikTok US rival’s offer

Apart from Microsoft and Oracle, rival short-form video app Triller has put in an offer for the app as well.

“Yes. Triller put a bid to acquire TikTok today. We believe the two teams can work alongside each other and create the best short-form video platform. Triller would be the best home for all of TikTok’s users as we have always put product and users first. This is the beginning of a new chapter,” Triller CEO Mike Lu confirmed the bid.

Triller is partnering with UK investment firm Centricus, Bloomberg reports. It will offer $10 billion cash up front, with another $10 billion in shared profit with ByteDance. 

The bid is unlikely to match up with those from Microsoft and the Oracle-lead consortium.

“When asked about a Centricus and Triller bid, a TikTok spokesman replied, “What’s Triller?” Another spokesperson called the potential deal “preposterous,” Bloomberg added.

Author: Francis Rey

Francis is a voracious reader and prolific writer. He has been writing about social media and technology for more than 10 years. During off hours, he relishes moments with his wife and daughter.

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