As the deadline for sale approaches, TikTok’s US business transactions are facing new obstacles, putting the app in danger of a US ban.
According to CNBC’s previous report, it was originally expected that the deal would be announced as soon as Tuesday, but that day came, but there was no news of the deal. Last Friday, China introduced new technology export restrictions. TikTok may require China’s approval to sell its algorithm, which is one of the core values of the application .
As of Monday, Oracle, Microsoft and Wal-Mart were TikTok’s top competitors in the US business, but the Wall Street Journal reported late on Tuesday that China’s new restrictions have complicated and extended negotiations. Sources previously told CNBC that the transaction amount is expected to fall between 20 billion and 30 billion US dollars. If key algorithm technology cannot be included, this price is likely to fall.
According to a Bloomberg report on Tuesday, China’s new regulations have prompted Zhang Yiming, the founder of TikTok’s parent company, Bytedance to reconsider his choice. A person familiar with the matter told Bloomberg that the approval of U.S. and Chinese officials may be required to push the transaction beyond the November U.S. presidential election.
Reuters reported on Wednesday, citing people familiar with the matter, that Bytedance and companies seeking to acquire TikTok’s US operations are considering four options to deal with China’s new restrictions:
- The first option is to sell TikTok without an algorithm, which may speed up the sale, but requires the new owner to inject alternatives into the app.
- The second option is to negotiate a year-long transition period with the Committee on Foreign Investment in the United States (CFIUS), although it is unclear whether China’s rules allow this within a specified time.
- The third option is to seek approval from China to sell the algorithm to selected US companies.
- The fourth option is for new buyers to obtain authorization to use TikTok algorithm from ByteDance. However, it is unclear whether the US authorities will be satisfied with TikTok and China’s Bytedance to continue their relationship after the sale.
If the deal negotiations continue until November or later, according to an executive order of US President Donald Trump, the app may face an effective ban in the United States. Trump initially signed an order to prohibit U.S. companies from trading with ByteDance on September 20, and later signed an order to force ByteDance to sell or spin-off its American TikTok before November 12. business.
Naijatechnews learned that TikTok has sued the Trump administration for the ban, saying it has rejected the company’s due process.
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