TikTok must be sold to an American company before the end of October. If the sale fails, the service will be banned in the United States. Chinese law could now get in the way of selling TikTok; a sales license is required.
ByteDance, TikTok‘s parent company, is negotiating with several parties in the US – the negotiations should ensure that TikTok becomes US-owned. It will not be easy, according to a report by The New York Times. China has introduced legislation on the export of ‘AI Technology’. Technology that the Chinese government may regard as sensitive cannot be sold without a license under the new legislation.
China is focusing on new legislation on technologies such as text analysis, speech recognition, and content suggestions. In principle, TikTok does not use speech recognition or text analysis, but it does offer ‘content suggestions’. What exactly the Chinese government means by this term is unknown. However, a government official told Xinhua News Agency that ByteDance should consider “seriously and carefully” to cut off negotiations with American companies.
Without directly saying that a possible sales ban is imminent, China has already ruled against a sale of TikTok to an American party. Microsoft, Oracle, Twitter, Netflix, and American Walmart, among others, are said to be in negotiations with ByteDance. TikTok was told last week by parent company TikTok that it must prepare to stop its activities in the US.
Lawsuit in the US
TikTok will not leave it there for the time being. On Monday, August 24, the company went to a US court to stop Trump’s decree. TikTok indicates in his indictment that little evidence has been released for Trump’s concerns about TikTok. According to the president, TikTok is a ‘danger to national security‘ because data from American users can fall into the wrong (read: Chinese) hands.
Microsoft was the first party to reveal interest in TikTok. Initially, Microsoft announced that it wanted to reach a deal with TikTok ‘before September 15’. Microsoft is no longer the only party willing to negotiate with ByteDance. Alphabet, Google’s parent company, would also have investigated whether it could (partly) become the owner of TikTok. Those negotiations have collapsed for unknown reasons.