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ByteDance to reconsider the sale of TikTok US arm after China's new restrictions

As per reports, ByteDance owner Zhang Yiming may reconsider the sale of TikTok's US arm after China introduced new export rules.

twitter-logoIndia Today Tech | September 3, 2020 | Updated 12:02 IST
(Source: Reuters)

Highlights

  • ByteDance owner Zhang Yiming may reconsider the sale of TikTok in the US.
  • The development comes after China updated export rules which restrict key technologies and algorithms.
  • US President Trump has said failure in compliance with executive order can lead to an app ban in the country.

ByteDance owner Zhang Yiming has found himself in a fix as the company may have to reconsider selling TikTok's US arm. Reports of ByteDance selling TikTok's US operations as early as Tuesday surfaced but there was no announcement regarding the same. This is likely because China signaled its involvement in any potential deal the company makes. Sources familiar to the matter told Bloomberg that Yiming was reconsidering his options after China's involvement.

As per the report, Yiming, due to the new dimensions could push the deal beyond the deadline set by US President Donald Trump or back out of the deal altogether.

China's newly introduced export control rules include some of TikTok's key technologies, algorithms and personalised information recommendation services based on data analysis that were included in the forbidden and restricted technology exports.

Tiktok heavily relies on algorithms to push viewers into making content based on their viewing history. As per a report by FT, the expost of such services is restricted and not banned which means there can still be a deal. However, it has to be in line with government regulations.

Meanwhile, the potential bidders of the deal -- Microsoft that entered a partnership with Walmart and Oracle are discussing how to interpret China's new rules and how to move forward, sources told NYT. As per reports, the sale price could be in the range of $20 billion to $30 billion

US President Donald Trump said that he has told people involved in the sale of the US assets of TikTok that the deal must be struck by September 15 and the federal government must be "well compensated," or the service will be shut down.

"I told them they have until Sept. 15 to make a deal — after that, we close it up in this country," Trump told reporters before boarding Air Force One for a trip to Kenosha, Wisconsin. "I said the United States has to be compensated, well-compensated."

Last month, Trump issued executive orders banning any US transactions with ByteDance and Tencent, owner of the WeChat app, starting in 45 days. The Trump administration called the Chinese apps "untrusted" and referred to them as "significant threats."

The TikTok app may be used for disinformation campaigns that benefit the Chinese Communist Party, and the United States "must take aggressive action against the owners of TikTok to protect our national security," Trump said in the order.

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