Chinese tech firm ByteDance, the owner of Tiktok, has said that it will "strictly adhere to" China's new rules on tech companies' takeover of companies overseas.
ByteDance has pledged to follow the Chinese government's new takeover law regarding Chinese tech companies overseas. These new export controls could potentially be used to hinder the sale of TikTok's US operations.
New takeover rules
China has listed several restricted items in the new takeover rules, which include some of the methods TikTok uses to target who sees which videos. A large part of its success can be attributed to its ability to quickly identify and cater to users' interests.
On August 28, the Chinese government, for the first time since 2008, decided to amend the list of technologies subject to export restrictions.
Under the new rules, two "civilian use" technologies that could directly impact TikTok have been included in the restricted list, namely interactive interfaces powered by artificial intelligence and personalized recommendations and notifications powered by data analysis.
Theoretically, Bytedance would need to ask for permission to sell the use of any related tech to a foreign entity, and preliminary approval could take up to a month to get.
If, as a result, the firm would be prohibited from including TikTok's recommendation engine as part of a sale, it would effectively cripple the app. This means that whoever takes over the US operations would need to develop a recommendation system of their own.
However, ByteDance pledged to follow the changes in rules. Company lawyer Erich Andersen said: "We are studying the new regulations that were released Friday. As with any cross-border transaction, we will follow the applicable laws, which in this case include those of the US and China."
Sale of TikTok US
Earlier this month, US President Donald Trump issued executive orders that would ban TikTok and WeChat in the US in 45 days if sold by their Chinese-owned parent companies.
The TikTok order states that after 45 days, “any transaction by any person, or with respect to any property, subject to the jurisdiction of the United States, with ByteDance Ltd.,” will be prohibited.
The order also makes the accusation that the social media platform “automatically captures vast swaths of information from its users,” such as location data and browsing and search histories, which “threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information — potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.”
Microsoft has confirmed its plan to buy TikTok amid issues with the app andhe tech giant said it held talks with ByteDance. Last week, retail giant Walmart said it is currently negotiating with Microsoft over a potential deal to acquire the TikTok US.
According to the retail company, its interest in TikTok comes from the way the app has “integrated e-commerce and advertising capabilities in other markets” and could bolster its access to consumers.
In a statement, Walmart said: “We believe a potential relationship with TikTok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses.”
