TikTok deal is complicated by new rules from China over tech exports

In a bureaucratic two-step, China on Friday updated its export control rules 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 published commentary by a professor 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.

“At a minimum they’re flexing their muscles and saying, ‘We get a say in this and we’re not going to be bystanders,’” said Scott Kennedy, a senior adviser at the Washington-based Center for Strategic and International Studies who studies Chinese economic policy. ByteDance and Oracle declined to comment on the rule changes and the Xinhua article. Microsoft did not have immediate comment. The U.S. Department of Commerce did not respond to requests for comment.

In Friday’s update to the export control rules, China’s Commerce Ministry and its Science and Technology Ministry restricted the export of “technology based on data analysis for personalized information recommendation services.” TikTok plays up its ability to use technology to understand users’ interests and fill their feeds with more of what they will enjoy watching.

“It is recommended that ByteDance seriously study the adjusted catalog, and carefully consider whether it is necessary to suspend the substantive negotiation of related transactions, perform the legal declaration procedures and then take further actions as appropriate,” Cui was quoted as saying. In other industries, too, foreign companies including Microsoft, Volkswagen and Chrysler have been investigated for what China says are anticompetitive practices. Beijing has rejected the charge, made by American business groups, that it uses laws like anti-monopoly rules to advance industrial policy.

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