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
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.