China’s Updates Export Rules Might Complicate the U.S. Sales Deal

China has rolled out an updated export rule that can complicate the pending TikTok’s U.S. operations deal. On Friday, China’s Ministry of Commerce issued an export control list which includes the restriction on the technology that confers personalized content recommendations with the help of data analysis.

Even though the latest rule has not explicitly targeted TikTok but its technology relies on the data analysis that might get the company into the restricted category. According to the reports published by The Wall Street Journal and the New York Times, this rule can jeopardize the deal. Nikkei Asian Review was the first one to report the matter.

Currently, it’s not finalized when the new rule will get into effect. Meanwhile, TikTok is striving to finalize the U.S. sales deal as early as possible. U.S. President Donald Trump has insisted TikTok to finalize its deal to sell the U.S. operations before September 15th; however, on August 14th it has extended its deal from 45 days to 90 days to divest their U.S. operations.

TikTok, the subsidiary of ByteDance, lies on the same technology foundation as Douyin, its rival Chinese competitor. Unlike TikTok whose operations are spread worldwide, Douyin has alienated itself from the rest of the world except China. According to a professor of International Trade in Beijing, ByteDance needs to get approval from the Chinese government and also added that they may have to curtail their negotiations.

Bytedance in a statement that it would “strictly abide” by China’s updated export rules “to handle business relating to the import and export of technology.” After 12 years, China has adjusted its lists for export bans which have now an additional 23 items. Now, even though Microsoft, Oracle, or any other company buys the company they won’t have their hands on the technology which won’t be worth it.

TikTok has over 100 million monthly active users in the United States and if it gets kicked out of the country, it would be a huge toll for them as for now it has lost its Indian market. However, this latest export rule move from China has changed the overall scenario.

Last week, the short video sharing platform filed a lawsuit against the Trump administration over banning the app. It has denied all the allegations over being a national security threat to the country. Amidst this, Oracle joined in the bid with Microsoft to buy TikTok, CBNC reported citing a person familiar to the matter. Meanwhile, TikTok’s Chief Executive Kevin Mayer resigned over the political disruption in the company.

Recently, China Daily, the country controlled media, expressed their displeasure over the matter by noting that “China will by no means accept the ‘theft’ of a Chinese technology company, and it has plenty of ways to respond if the administration carries out its planned smash and grab.” Besides this, Bloomberg reported that Triller, its rival app, is also in the bid to buy the company. However, TikTok denied all the reports while their spokesperson added that “we are flattered by how much they admire TikTok.” Meanwhile, Triller said it has made its USD 20 Billion bid, not to the TikTok but its owner Bytedance.