Beijing complicates TikTok sale
ByteDance would need export license from government
NEW YORK — The Chinese government is complicating the U.S.-governmentordered sale of U.S. TikTok assets.
The Commerce Ministry on Friday introduced export restrictions on artificial intelligence technology, adding speech and text recognition and personalized recommendations to a list of products that require approval before they’re sold abroad. These areas cover the very technologies ByteDance employed to make TikTok a viral teen sensation from America to India.
The restrictions mean TikTok’s Chinese owner, ByteDance, would have to obtain a license to export any restricted technologies to a foreign company.
The Trump administration has threatened to ban TikTok by mid-month and ordered ByteDance to sell its U.S. business, with a valuation estimated at $20 billion to $50 billion, claiming national-security risks due to Chinese ownership. The government worries about user data being funneled to Chinese authorities. TikTok denies it is a nationalsecurity risk and is suing to stop the administration’s threatened ban. TikTok is also banned in India.
Prospective buyers for U.S. TikTok assets include Microsoft and Walmart and, reportedly, Oracle. Oracle has declined to comment.
On Saturday, Chinese state-owned media outlet Xinhua News Agency quoted government trade adviser and professor Cui Fan, who said ByteDance should consider whether it should halt negotiations to sell TikTok in the U.S.
“As with any cross-border transaction, we will follow the applicable laws, which in this case include those of the U.S. and China,” said ByteDance general counsel Erich Andersen.
The Chinese government’s new restrictions may be a “tactic to drive up valuation” of TikTok, said RBC Capital Markets ana
lyst Alex Zukin, who still expects a deal announcement “relatively soon.” The Wall Street Journal reported last week that ByteDance is asking for $30 billion for the U.S. operations, but has faced resistance from bidders. The Journal said in a Sunday story that deal talks had “slowed.”
China’s opaque regulations introduce more unknowns into an already delicate process involving multiple corporations, agencies and federal court, all converging days before President Donald Trump’s executive order banning TikTok takes effect ahead of the November election. It could take up to 30 days for
ByteDance to get the green light to export artificial intelligence, said Zhaokang Jiang, a trade attorney and managing partner of GSC Potomac.
The involvement of Beijing, which has denounced Trump administration bans on TikTok and Tencent’s WeChat, muddies the waters as American corporations and investors vie to hammer out a deal by the deadline.
“We’ve been seeing U.S. restrictions on China on a daily basis. We can’t expect China to have no response at all,” said Wang Huiyao, an
adviser to China’s cabinet and founder of the Center for China and Globalization.
China’s Foreign Ministry criticized the American government’s moves again Monday.
“We are opposed to the U.S. abusing the national security concept and state power to suppress specific businesses of other countries,” Chinese Foreign Ministry spokesman Zhao Lijian said at a daily briefing in Beijing. “The U.S.’s attempt to take economic bullying and political manipulation against non-American companies, whether it is politically coerced transaction or government-enforced transaction, is no different from plundering.”
ByteDance Chief Executive Officer Zhang Yiming has said the company is
working rapidly to resolve its geopolitical headaches. But Beijing’s insertion into the process raises the chances that it may just decide to veto or at least delay a deal, with unknown ramifications.
Those outcomes may appeal to Zhang, the 37-yearold founder who built ByteDance into the most valuable startup in the world with a $140 billion valuation, according to CB Insights. He had long resisted giving up control of TikTok because he thinks the service is evolving into one of a handful of major online advertising businesses, alongside Facebook and Google.