TikTok sale could need China’s approval under revised rules

A sale of TikTok’s U.S. operations may have additional barriers to overcome following the implementation of new technology export rules in China.

The government in Beijing on Friday updated its export rules to cover some technologies it considers sensitive, The New York Times reported, which could mean the Chinese internet firm ByteDance needs a license before selling part of the wildly popular video app. 

Citing national security concerns, President Trump in early August issued an executive order effectively banning TikTok from operating in the U.S. unless it was sold to a U.S.-based company. The president signed another order one week later calling for ByteDance to divest its American assets and any data it obtained from TikTok users in the U.S.

Microsoft has acknowledged that it is in talks with ByteDance about a potential sale. Walmart said last week it was looking to secure a joint deal with the tech company. Oracle is also said to be engaging in discussions with ByteDance. 

China’s updated list on export restrictions included “technology based on data analysis for personalized information recommendation services,” the Times noted. 

Cui Fan, a professor University of International Business and Economics, told Xinhua, the state-run press agency in Beijing, that the revised restrictions could apply to a potential TikTok deal. He added that ByteDance would need to go through the Chinese government’s approval procedures. 

Cui cited ByteDance’s offering of core algorithm services to overseas branches, noting “no matter who its new owner and operator are, it is highly likely that there will need to be a transfer of software codes or right of use from inside China to outside China.”

It could take as many as 30 days for a company like ByteDance to gain preliminary approval to export the technology, Reuters reported

TikTok has been thrust to the center of an increasingly fractious relationship between the Trump administration and China. As the app exploded in popularity in the U.S., with roughly 100 million users, lawmakers began voicing growing concerns over its collection of data and the possibility that it could be shared with China. 

TikTok last week filed a lawsuit against the Trump administration, claiming the president’s orders violated its rights to due process and that he failed to present evidence for his position that the app presents a threat.

TikTok CEO Kevin Mayer also resigned last week, telling employees that the role he signed up for would look significantly different in wake of Trump’s decision.