Chinese Government Decides to Throw Wrench Into Potential TikTok U.S. Deal

China has decided it will not be sidelined on the U.S. TikTok deal. (Photo: Olivier Douliery, Getty Images)
China has decided it will not be sidelined on the U.S. TikTok deal. (Photo: Olivier Douliery, Getty Images)

China has something to say about the potential deal to sell TikTok’s U.S. operations: not so fast.

Although the TikTok saga in the U.S. to date has had President Donald Trump as the main character, or some would say antagonist, the Chinese government apparently doesn’t like to be sidelined. The New York Times reports that China is signalling that it wants the final say over any potential sale of TikTok’s U.S. operations to an American company.

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China indicated as much in two major moves in recent days, per the Times. First, the country updated its export control rules — a list that dictates which technologies can be exported — for the first time in 12 years. Some of the technologies added to the list, such as “technology based on data analysis for personalised information recommendation services,” sound a lot like the technology that TikTok uses, the Times reported.

Technologies on China’s export list can’t be exported without a licence from commerce authorities.

But China did not stop with a simple update. It then decided to send a more pointed message to ByteDance, TikTok’s Chinese owner, and presumably to TikTok’s American suitors, which include Microsoft, Walmart and Oracle. On Saturday, the country’s official news agency, Xinhua, published a commentary by a professor who said that the new export rules mean that ByteDance might need a licence to sell TikTok to a U.S. company.

Cui Fan, an international trade professor at the University of International Business and Economics, said the changes to the export list would most likely apply to TikTok, according to the Times.

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“If ByteDance plans to export relevant technologies, it should go through the licensing procedures,” Cui said in the interview published by Xinhua.

He added that any sale of TikTok would most likely require the transfer of overseas code and technical services.

“It is recommended that ByteDance seriously study the adjusted catalogue, and carefully consider whether it is necessary to suspend the substantive negotiation of related transactions, perform the legal declaration procedures and then take further actions as appropriate,” Cui said.

ByteDance’s General Counsel Erich Andersen told Reuters that the company was studying the new regulations and that it would follow the applicable laws related to the cross-border transaction, including those in the U.S. and China.

China-based ByteDance and TikTok’s American suitors have been racing to get a deal done before the Trump administration’s Nov. 12 deadline. If ByteDance doesn’t sell to a U.S. company by that date, the president has threatened to ban the app in the country.

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The Trump administration has claimed that TikTok is a national security threat and could provide data on U.S. users to the Chinese government. TikTok has vehemently denied these claims. Nonetheless, a report earlier this month stated that the social network had quietly collected persistent identifiers from Android devices for 15 months in apparent violation of Google policy.

[The New York Times]