China Intervenes in TikTok Deal

Posted on August 29, 2020 by Paul Thurrott in Cloud, Microsoft, Social with 16 Comments

With TikTok poised to sell its non-Chinese assets to Microsoft or Oracle, China took steps to intervene in any deal.

Today, China updated its export control rules.

“In accordance with the Foreign Trade Law of the People’s Republic of China and the Regulations of the People’s Republic of China on the Administration of Technology Imports and Exports, the Ministry of Commerce and the Ministry of Science and Technology have made partial adjustments to the contents of the China List of Prohibited Export Restricted Export Technologies,” a translated version of the announcement reads. “It belongs to dual-use technology and is incorporated into export control management.”

The phrase “dual-use” refers to technology that could have both civilian and military use. And among the changes is a list of over 50 technologies that China now considers too sensitive for sale outside of the country, including one that sounds a lot like TikTok’s recommendation service. If this is accurate, then ByteDance, TikTok’s owner, would need a license to sell this technology to a U.S.-based company.

It’s not clear if China is making the change to block the sale of TikTok or to help dictate better terms. And it’s possible that this last-minute intervention could frighten off Microsoft or Oracle, or at least slow down the acquisition process, which seemed on the verge of culminating at any time.

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Comments (16)

16 responses to “China Intervenes in TikTok Deal”

  1. Avatar

    cnic

    Ya’ know... Haven’t been to a movie since this pandemic hit. This TicTock thing is unbelievably entertaining! So far a comedy. If MS actually buys this can of worms - then a tragedy.

  2. Avatar

    SvenJ

    Need to run out and buy more popcorn.

  3. Avatar

    olditpro2000

    Microsoft (and Walmart) should run away from this as fast as possible.

  4. Avatar

    jimchamplin

    All of this over a stupid ephemeral video app. Folks are dyin' by the thousands, people are screaming for rights, and this useless little shitty video service is going to become an international incident.

    • Avatar

      bart

      In reply to jimchamplin:

      I hear you, but this isn't just about TikTok. This is could happen to any type of business. If I were China, I'd stall the process and hope that orange baboon leaves the White House.

      • Avatar

        stvbnsn

        In reply to Bart:

        CFIUS opened an investigation in to ByteDance's Musical.ly acquisition, so the slow wheels have begun to turn in the US, to a legally sustainable ban on TikTok. I think the more salient point is that the shallow interpretation of this is, that it's the whims of an idiot (Trump,) when really it's become clear that a much more hawkish view of China has become a solidly bipartisan belief.

      • Avatar

        jimchamplin

        In reply to Bart:

        No, I hear ya. It's just that THIS is where it gets decided. Over THIS app. Not over Huawei or something like that. No. TikTok. I'm just commenting on the specific topic, that it's THIS particular hill that the political machine wants to die on.

  5. Avatar

    straker135

    Does anyone know what proprietary technology Tik Tok might have that Microsoft actually needs? Given Microsoft's rank incompetence with anything primarily consumer facing why, oh why, would they want this ephemeral property otherwise. It seems to me that even if it is a valuable asset, it is very very expensive for what Tik Tok seems to bring to the table. 100 million users? pfffft! Gone by lunchtime if Microsoft get hold of it. Look what happened to Skype. We used to 'skype' people, now we Zoom them. Yes, yes I know Covid19 had a lot to do with that but that just emphasizes that the small nimble, flexible companies can take advantage of opportunities much better than a behemoth like Microsoft, where a property like Skype, Kinect, Hololens or Tik Tok gets easily overlooked and allowed to wither on the vine.

  6. Avatar

    digiguy

    China is buying time so that Tiktok is not sold before the elections and once Trump is not reelected it will be less of an issue...

  7. Avatar

    peterc

    Well here we are - we've reached the point where China sets out its response to the US Govt, and in particular, Trumps administration team that its had enough of the public SHOUTING and non-negotiating by Trump and US gameplaying. They've waited till now so both US political parties understand that whoever wins the election, this is what's going to happen going forward with regards relations and dealing with China going forward.


    There isn't going to be any "winning" here people....


    China has listed 24 broad "technologies" that will now require Chinese Govt export license and approvals - mirroring the US strategy. These are areas such as "space materials", "digital encryption", " Artificial Intelligence" and a whole heap of "high-tech, design and science/manufacturing equipment", Drone technologies, Chemical raw material production (rare earth materials for semi-conductor manufacture) and bio-tech pharmaceutical manufacturing (medicines and vaccines etc).


    These are now designated a core part of Chinas national security and are now protected .... going forward its likely that if TSMC cant manufacture chips for Huawei then Intel, Qualcomm and TSMC etc wont be able to buy enough raw materials to manufacture their goods for western companies. (china controls 95% of these materials production). The same will apply to the re-started US Space Program, medicines etc etc. The list is eye opening in its scale when you realise just how much is bought by the US and western Govt's for its economies.


    Tik Tok is merely an example of how this will play out going forward.. Its AI and Encryption are not for sale.


    The two sides will either formerly de-couple or agree trade. Until that point arrives though, expect alot of disruption to supply lines and business as usual. If Huawei is pushed under then something reciprocal will occur etc etc etc.


    This was all so avoidable and has only served US political self interest....

  8. Avatar

    Username

    So confused. I thought TikTok was at arms’ length from Chinese government.

  9. Avatar

    madthinus

    Dear Microsoft.


    Please don't!

  10. Avatar

    starkover

    In reply to lvthunder:

    You must not pay attention to much then, :)

  11. Avatar

    glenn8878

    This was argued in a Yahoo article as a win for Tik Tok to get back at the Trump Administration. However, it could just play into Trump's hand to outright ban the app since it is all about Chinese technology used nefariously against users in the US. At best, Microsoft and Oracle absolutely should bid less for the company and have the offending Chinese technology removed.

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