China in­ter­ven­tion thwarts Tik­Tok break-up

Bei­jing’s last-minute move over ex­port con­trols may mean forced sale is de­layed un­til af­ter the US elec­tion

The Daily Telegraph - Business - - Business - By James Cook

A LAST-MINUTE Chi­nese in­ter­ven­tion over the forced sale of Tik­Tok’s US op­er­a­tions may al­low par­ent com­pany Bytedance to de­lay ne­go­ti­a­tions un­til af­ter the US elec­tion, ex­perts have said. The Com­mu­nist regime an­nounced new ex­port con­trols on do­mes­tic tech­nol­ogy late last week which could de­lay or block the sale of the vi­ral video app, po­ten­tially giv­ing Bei­jing-based Bytedance vi­tal breath­ing space as it seeks to dodge a break-up.

Don­ald Trump, the pres­i­dent, has said that Tik­Tok faces a ban on op­er­at­ing in the US if a deal is not struck by Nov 12, cit­ing na­tional se­cu­rity con­cerns over its ac­cess to data on Amer­i­can users. The de­cree has left Bytedance with no choice but to sell its op­er­a­tion in the US, to the dis­may of the firm’s bosses.

But it could now take ByteDance up to 45 work­ing days to se­cure ap­proval by the Chi­nese gov­ern­ment to ex­port key parts of the Tik­Tok app.

This de­lay may mean ByteDance misses the sale dead­line but is able to blame Chi­nese bu­reau­cracy.

Ex­perts be­lieve that in­ter­ven­tion may have been de­signed to pause ne­go­ti­a­tions un­til Novem­ber in the hope that an elec­tion vic­tory for Joe Bi­den could trig­ger a sharp drop in pres­sure on the busi­ness. Jef­frey Tow­son, a pro­fes­sor of in­vest­ment at Pek­ing Univer­sity Guanghua School of Man­age­ment, said the fresh ex­port con­trols are likely to hold up any deal.

He said: “The Chi­nese gov­ern­ment has just re­minded ev­ery­one that they are the ul­ti­mate de­cider on this deal.

“For the ex­port con­trols to be up­dated this week, af­ter so many years, is not a co­in­ci­dence.

“It would not sur­prise me if their in­ter­est is to de­lay this process un­til af­ter the US elec­tion and then see what hap­pens.” Be­fore the Chi­nese in­ter­ven­tion, com­pany in­sid­ers had ex­pected a deal to sell Tik­Tok’s US op­er­a­tions as soon as yes­ter­day.

A joint bid be­tween Mi­crosoft and Wal­mart is lead­ing the race to buy the app’s op­er­a­tions in Amer­ica, with soft­ware busi­ness Or­a­cle also cir­cling.

Tik­Tok’s US op­er­a­tions have re­port­edly been val­ued at be­tween $20bn (£14.9bn) and $30bn.

How­ever, the new laws could block par­ent com­pany ByteDance from giv­ing po­ten­tial buy­ers ac­cess to the video rec­om­men­da­tion al­go­rithm which is an es­sen­tial part of its Amer­i­can sys­tems. Chi­nese ex­port con­trols in­tro­duced late last week pro­hibit the ex­port of tech­nolo­gies such as “per­son­alised in­for­ma­tion rec­om­men­da­tion ser­vices based on data anal­y­sis”.

Ex­perts say th­ese con­trols are likely to cover parts of the Tik­Tok app.

Zhang Yim­ing, ByteDance chief ex­ec­u­tive, is now ex­am­in­ing whether it will be pos­si­ble to sell Tik­Tok’s US op­er­a­tions fol­low­ing the new ex­port con­trols, Bloomberg re­ported.

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