China export rules aim to slow down TikTok sale

China export rules aim to slow down TikTok sale

The two groups vying to buy TikTok's US business - one is an alliance between Microsoft and Walmart, and the other is an offer led by Oracle - are discussing how to interpret China's new rules and how to move forward, said the people, who were not authorized to speak publicly.

Already, the Trump administration has placed sanctions on dozens of Chinese companies in recent weeks over alleged security threats and human rights violations, and it has threatened to take more measures to block Chinese tech companies like Alibaba and Baidu from doing business in the U.S. Under Trump, the sale of Grindr, the gay dating app, to Beijing Kunlun Tech Co., a Chinese company, was unwound.

With the new restriction in place, it would seem that making an outright sale for TikTok has gotten exponentially hard for Bytedance.

"At a minimum they're flexing their muscles and saying, 'We get a say in this and we're not going to be bystanders, '" said Scott Kennedy, a senior adviser at the Washington-based Center for Strategic and International Studies who studies Chinese economic policy, to the New York Times.

The video-sharing app said: "The executive order seeks to ban TikTok purportedly because of the speculative possibility that the application could be manipulated by the Chinese government".

China on Friday introduced export restrictions on artificial intelligence technology, seemingly including the type that TikTok uses to choose which videos to spool up to its users.

Walmart last week became the latest company to want a piece of TikTok after making a joint bid with Microsoft.

Bytedance said the regulations now mean they must obtain a license from the Chinese government before they can sell to a U.S. company. TikTok has so far denied all allegations of having privacy loopholes and ties to the China government, and has also recently sued the United States government for what it claims is unfair treatment given to it by America.

Bytedance said in a statement it would "strictly abide" by China's technology law and its list of restrictions "to handle business relating to the import and export of technology".

It comes after TikTok CEO Kevin Mayer quit last week just days after the company filed a lawsuit challenging the crackdown by the United States government.

The actual competitive target for Walmart and Microsoft is likely Amazon. Zhang would be relinquishing control over an asset that boasts upwards of a 100 million users in the US and is on the cusp of monetizing that base. The two companies signed a 5-year partnership in 2018, enabling them to join forces against a shared rival: online shopping giant Amazon. Companies like Microsoft and Oracle was linked with the transaction. The initial announcement set off a flurry of interest from other companies.

The online poll, with a 3 percentage point margin of error, surveyed over 1,000 adults and found that while 40 percent of Americans agreed with the order and 30 percent of Americans did not agree, 30 percent claimed that they didn't have enough knowledge to have an opinion.

On Thursday, CNBC reported that TikTok would announce the sale of its US, Canadian, Australian, and New Zealand operations in the coming days, a deal estimated to be valued at between $20 and $30 billion.

While the Trump government has set a September 15 deadline for TikTok to either be sold or be banned in U.S., its largest foreign market at the moment, the export restriction may stall any potential buyout transaction that may have been in process.

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