China’s revised export policies may directly affect TikTok’s recommendation engine.
TikTok is ready to sell its US, Canada, New Zealand, and Australia assets, but China’s new export rules may affect the upcoming deal. The revision puts restrictions on AI and personalization technology, which may hurt the sale.
TikTok Must Comply With China’s Export Policies
TikTok faces pressure from US President Donald Trump, who has threatened to ban the Chinese-owned app if it doesn’t sell its US assets. TikTok has already attracted a number of potential buyers, including the Walmart and Microsoft, plus Oracle.
China recently added 23 new items to its export control list, which only complicates the sale of TikTok even more. The new list of restricted export technology now includes AI, as well as technology that customizes information based on data analysis. Any transactions that include these technologies are subject to an approval process that could take up to 30 days.
TikTok relies on both of these technologies to display personalized content for its users. Its For You page keeps users glued to an endless feed of recommendations based on their previous activity. This content recommendation engine is key to TikTok’s success.
In an interview on state-owned news outlet, Xinhua, Chinese scholar, Cui Fan, recommended that TikTok takes the time to consider the new policies, saying:
It is suggested that ByteDance carefully study the revised catalogue, seriously and carefully consider whether it is necessary to suspend substantive negotiations on relevant transactions, comply with statutory application and reporting procedures, and then take further actions as appropriate.
TikTok’s parent company, ByteDance, is prepared to follow China’s new regulations. ByteDance said that it will “strictly abide” by the new regulations in a statement to Chinese news source Toutiao.
It’s still not confirmed how the new export policy will affect the TikTok sale, or even if it will. But since China’s export rules haven’t been updated since 2008, the timing of this revision is a bit suspicious.
Can TikTok Survive the Sale?
There’s no telling how the new export policies will affect the upcoming TikTok deal. Whether it will dissuade potential buyers or impact TikTok’s recommendation algorithm, the TikTok sale is no longer as straightforward as it was before.
This means that the company who buys TikTok will have a lot of work to do. Not only will it have to deal with China’s export policies, but it will also have to address TikTok’s security flaws.
TikTok security breaches can cause havoc for users. But Chinese ownership makes the social network an even greater security risk.