ByteDance Reconsidering Sale Options After China’s New Tech Export Rules

September 2, 2020 3:23 am

Beijing (PingWest)—ByteDance founder Zhang Yiming is reconsidering the sale of TikTok's US operation after the Chinese government signaled it will get involved in any deal’s approval, Bloomberg reported, citing people familiar with the matter.

The company’s regulatory team and transaction negotiators are discussing whether the deal can be approved by the two governments, the acquirer, venture investors and ByteDance itself.

Previously, on August 14, US President Donald Trump issued an executive order requiring ByteDance to divest TikTok's US business within 90 days or the short video app will be banned. 

Microsoft, which is bidding with Walmart, and Oracle, which gets support from venture capitalists such as Sequoia Capital, have conducted in-depth negotiations on the acquisition of TikTok in the US. 

However, as China implements new rules on technology exports, plans to sell TikTok may encounter new obstacles.

Last Friday, the Ministry of Commerce and the Ministry of Science and Technology, added a total of 23 items subject to export restrictions, including AI, algorithms, and other technologies considered sensitive by China. The move means that Beijing-headquartered ByteDance have to obtain permission from Chinese authorities before selling TikTok to an American company. 

China's involvement increases the possibility that Zhang will stick to the US action even after the deadline set by the US or even if he continues to abandon the deal altogether.

A person familiar with the matter told Bloomberg that in any case, the approval of Washington and Beijing and the already very complicated negotiations could make any final agreement go beyond the November elections in the US.

But Trump said on Sept.1 that he has informed those involved in TikTok's sale that the transaction must be concluded before Sept. 15 and the federal government must be “well compensated,” otherwise the service will be shut down within the country.