Beijing threatens to yank TikTok out of Trump’s reach
New rules from the Chinese Commerce Ministry define what appear to be core parts of TikTok’s algorithm as “sensitive technologies.” The change likely means that any sale of TikTok would have to be approved by Beijing.
By the end of last week, it seemed like the pieces were falling into place for TikTok and its future in the American market.
- Though the ByteDance-owned app had been jerked around repeatedly for over a month, with President Trump setting an ultimatum for the company to either sell its U.S.-based operations or be banned by September 15 (the deadline was later extended to November 12), eliciting anger back in China, it was on the road to a deal.
- Microsoft and Walmart were teaming up to make the purchase. (Although the Trump administration was unlikely to have problems with the two classic American companies owning TikTok, Kevin Mayer, the Disney dream boy that the hip app had hired as it faced headwinds, was not impressed and headed out the door.) Other groups of companies, including Centricus and Triller, and Oracle in a possible “coalition of investors,” were also expressing interest.
Then, a last-minute curveball came not from Trump, but from China. The New York Times reports:
In a bureaucratic two-step, China on Friday updated its export control rules [link in Chinese] to cover a variety of technologies it deemed sensitive, including technology that sounded much like TikTok’s personalized recommendation engine. Then on Saturday, the country’s official Xinhua news agency [link in Chinese] published commentary by a professor [Cuī Fán 崔凡 of the University of International Business and Economics] who said the new rule would mean that the video app’s parent, the Chinese internet giant ByteDance, might need a license to sell its technology to an American suitor.
Two specific pieces of technology appear to refer to core components of TikTok’s algorithm, Caixin reports. They are:
- “Personalized information push service technology based on data analysis” (基于数据分析的个性化信息推送服务技术 jīyú shùjù fēnxī de gèxìnghuà xìnxī tuīsòng fúwù jìshù).
- “Artificial intelligence interactive interface technology” (人工智能交互界面技术 réngōng zhìnéng jiāohù jièmiàn jìshù).
ByteDance will “strictly comply” with the regulations, the company said on Sunday, per TechNode.
Why did Beijing change the rules?
The list of sensitive technologies, maintained by China’s Commerce Ministry, had not been updated in 12 years before last Friday, TechNode points out. This signals that Beijing “could be looking to interfere with TikTok’s forced sale.”
But the “new rule is aimed at delaying the sale and is not an outright ban,” according to a source cited by Bloomberg (porous paywall).
Beijing just transformed TikTok from a casualty of U.S.-China tech tensions into a real bargaining chip. We will likely find out before long whether it was worth it.
Correction: In the original version of this story, we incorrectly implied that the Trump administration’s deadline for the forced sale of TikTok was still September 15. That deadline has been extended by 45 days to November 12.
