Economy

Planned TikTok deal entails China's approval under revised catalogue

Planned TikTok deal entails China's approval under revised catalogue”

President Donald Trump earlier this month threatened to ban TikTok in the United States if it was not sold to a U.S. buyer within 45 days in an effort to separate the social media upstart from its Chinese parent ByteDance.

ByteDance could announce its pick as early as Tuesday, CNBC reports, though any deal could face major delays in light of the new Chinese regulations. Specifically, the Chinese Commerce Ministry added speech and text recognition - key elements of TikTok's technology - to a slew of products that will now need government approval prior to their sale to foreign entities.

In a statement, ByteDance said that it was aware of the new restrictions imposed by the government on technology exports and would "strictly comply" with them.

The Chinese government on Friday put forth a list of companies and technologies that would get banned or be restricted to export. The list also includes restrictions relating to laser technologies, cryptography, chip design, and other important areas of technological progress.

The company's regulatory team and deal negotiators are in discussions to see if it's still possible to craft a sale that can win approval from both governments, an acquirer, venture investors and ByteDance itself, said one of the people on condition of anonymity.

White House press secretary Kayleigh McEnany, during a White House briefing, did not directly answer whether the administration would accept a sale of US assets of TikTok if the deal were subject to Chinese government approval.

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So far, Microsoft and Oracle have been in talks to buy the business, with the former company partnering up with Walmart to offer a joint bid that will compete with the California-based computer technology company. If there will be a response from the Chinese government, it should be after the US presidential elections in November.

Citing national security risks, POTUS gave the video-sharing company 90 days to find a USA buyer and requested that TikTok delete any data that it had obtained from its users. President Trump has threatened to ban the app entirely in the USA unless parts of it are sold to a US company. However, Microsoft and Oracle seem like the most likely to get a deal down.

"As with any cross-border transaction, we will follow the applicable laws, which in this case include those of the USA and China", said ByteDance General Counsel Erich Andersen. TikTok's U.S. operations have been valued at between $20bn (£14.9bn) and $30bn, it has been reported.

It had been reported that a deal to sell TikTok's U.S. operations could have been announced as soon as Tuesday.

"He thought that by making a promise to follow worldwide standards or rules he would be able to escape the regulation or the kind of pressure from the American government", said Ding.



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