China internet group ByteDance Ltd. may have to set aside talks over the unresolved sale of its short video-sharing app TikTok, a trade expert said after the government released revised guidelines of technologies subject to new restrictions.
TikTok parent company ByteDance has to reconsider its options regarding the sale after China released new limitations on the trade of artificial intelligence technology. This means ByteDance will be mandated to seek China regulatory permission to proceed with the planned sale of its U.S. operations.
China has been making revisions to its trade laws in the past few years to regulate the sale and acquisition of technological products and services - which includes the banning of forced technological transfers from foreign entities. ByteDance could be covered by the new import-export law because its TikTok app is in the process of disposing of its assets in the U.S. that involve new technology, market observers said.
Commerce officials in China have released the new policies that specifically stipulate "civilian use" to the list of restrictions. The popular app features short videos of just about everything - from acting impersonations, song and dance routines and funny mockeries of life's struggles. These things could prevent a successful sale of the app under the new rules.
ByteDance's potential buyers include Microsoft Corp., Oracle Corp. and Walmart Inc., sources who requested anonymity, said. The new restrictions are intended to delay - and not totally bar - the sale of TikTok's U.S. business, the sources said.
U.S. President Donald Trump and his advisers have repeatedly stressed that the China technology group must fully divest its U.S. operations of the popular app - which has been at the center of a diplomatic showdown between China and the U.S. for what the Trump administration claims is a potential danger to U.S. national security.
ByteDance, for its part, has filed charges against the U.S. government claiming that it safeguards user information and is challenging the U.S. president's executive order that would ban TikTok if it fails to find any takers for its U.S. operations.
The China technology group said it was fully aware of the new regulations and said it would "strictly" adhere to these. Still, executives at ByteDance are working to get a clearer grasp of the new policy - including attempts at striking some semblance of accord between two parties that have been at loggerheads which could make sealing an agreement very difficult, analysts said.