China Restricts TikTok Overseas Purchase with New Export Controls

Chinese government approval now needed . . .

Under the Chinese government's newly announced regulations, TikTok's parent company ByteDance will need approval from the Chinese government to sell its TikTok operations to an American buyer. Beijing has recently updated its export controls, essentially restricting the sale of video-sharing social media app TikTok to a non-Chinese entity, as the app’s technology is now labelled a matter of national security. Beijing added Artificial Intelligence (AI) interface technologies to the country’s export-controls, marking the first update to the list since 2008. To continue to “safeguard national economic security,” Chinese government-issued permits will now be required for transfers of such technologies abroad.

U.S. TikTok acquisition in question . . .

This move by China comes after U.S. President Donald Trump set a mid-September deadline for the purchase of TikTok’s American operations by a U.S. company to avoid being banned in the U.S., a deadline he subsequently postponed until mid-November. Several major U.S. companies have expressed an interest in acquiring the company. However, Beijing’s new export controls are an unexpected development, which may present a challenge for Microsoft, Oracle and other companies that have already submitted bids to purchase the app.

A possible precedent-setting change?

The changes to China’s export controls list expands the unknowns for technology and social media companies that use AI interface technologies. There is a fear that this change may usher in a new era of heavy government regulation and oversight worldwide over future acquisitions of technology and social media companies by foreign entities. The consequences of Beijing’s change, including for TikTok and other companies using similar technologies, and for governments worldwide, including Canada, remain to be seen.