For the first time since 2008, Beijing has updated its list of technologies subject to export restrictions, adding 23 new items and complicating TikTok’s sale of its American, Canadian, Australian, and New Zealand divisions. The move was made to protect national economic security.
The two items directly impacting TikTok are:
- interactive interfaces powered by artificial intelligence
- personalized recommendations and notifications powered by data analysis
Essentially, ByteDance must now ask for direct permission from the Chinese government to sell TikTok which could take up to a month or, crucially, be blocked.
TikTok doesn’t necessarily have a month though, despite President Trump granting the short-form video app an extra 45 days to sell its US operations or before it is banned completely.
The app has sparked fears surrounding national security due to the Chinese Communist Party’s rules regarding data sharing. Though TikTok is planning to sue the Trump Administration and adamantly denies any allegations of spying, actual or potential, it has been in talks with Microsoft and Walmart, Oracle and Twitter so it can continue to operate in the US.
However, as BBC states, “Were the company to be forbidden from including TikTok’s recommendation engine as part of a sale, it would in effect cripple the app.
“That would mean a buyer would have to develop a recommendation system of their own, making a smooth handover of control difficult to achieve.”
A person familiar with the matter who wished to remain anonymous said that the rule is not an outright ban, but is aimed at delaying the sale.
ByteDance, TikTok’s parent company, has said it is aware of the new regulations and plans to strictly comply. According to Bloomberg, “The company’s executives are working to understand the new rule, and the attempt to please two governments that are already at odds could make logistics for any deal more challenging.”