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New Rules From China Over Tech Exports Could Complicate Sale of TikTok

In an 11th-hour twist, Beijing raised a potential hurdle for a sale of TikTok, further roiling the race to buy the Chinese-owned app.

Ola Olaoluwa
Ola Olaoluwa

As the sale of TikTok enters its final stages, Beijing is saying it wants the last word.

In a bureaucratic two-step, China on Friday updated its export control rules to cover a variety of technologies it deemed sensitive, including technology that sounded much like TikTok’s personalized recommendation engine. Then on Saturday, the country’s official Xinhua news agency published commentary by a professor who said the new rule would mean that the video app’s parent, the Chinese internet giant ByteDance, might need a license to sell its technology to an American suitor.

Beijing’s last-minute assertion of authority is an unexpected wrinkle for a deal as two groups race to buy TikTok’s U.S. operations before the Trump administration bans the app. Taken together, the rule change and the commentary in official media signaled China’s intention to dictate terms over a potential deal, though experts said it remained unclear whether the Chinese government would go as far as to sink it.

ByteDance Employees leaving ByteDance's Beijing Headquaters last month. The Tech firm has been embroiled in the ongoing China-US tensions

The moves from Beijing ensnare TikTok and potential American buyers including Microsoft and Oracle, wedging them in the middle of a tussle between the United States and China over the future of global technology. Beijing’s displeasure alone could scare off TikTok’s suitors, many of whom have operations in China. TikTok is the most globally successful app ever produced by a Chinese company, and the conflict over its fate could further fracture the internet and plunge the world’s two largest economies into a deeper standoff.

“It could be an effort to outright block the sale, or just raise the price, or attach conditions to it to give China leverage down the road,” said Scott Kennedy, a senior adviser at the Washington-based Center for Strategic and International Studies.

He added that it showed a rare bit of consensus between China and the United States that both agreed ByteDance was a national security priority.

If Beijing blocks the sale of TikTok, it would effectively be calling the Trump administration’s bluff, forcing the U.S. government to actually go through with restricting the app and potentially incurring the wrath of its legions of influencers and fans. Ordering companies like Apple and Google to take down TikTok in app stores globally could also prompt further anger against the Trump administration and even lawsuits.

China’s changes to its export rules came just as ByteDance had signaled that it was close to reaching a resolution on the future of TikTok’s business in the United States. President Trump this month issued an executive order restricting Americans’ dealings with TikTok beginning in mid-September. He and other White House officials have said the app could be a Trojan Horse for data gathering by the Chinese Communist Party, an accusation that ByteDance has denied. That set off the deal negotiations.

News

Ola Olaoluwa

Writer | Economist | Actor | Fashion Entrepreneur