TikTok’s Potential Sale of Its US Business May Be Complicated by New Chinese Rules

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Chinese authorities on Friday revised the rules governing the sale of certain types of technology to foreign buyers. The updated list includes data processing, speech and text recognition, according to government notices.

The announcement marked the first time that these rules have been revised since 2008. China’s Ministry of Commerce and the Ministry of Science and Technology said the changes were aimed at “formalizing the management of the export of technology.” and “protect national security”.

The reviews did not name TikTok or its Beijing-based owner ByteDance, but experts pointed out that the rule change would require ByteDance to obtain government clearance before it could sell TikTok to a foreign company.

State News Agency Xinhua quoted a trade expert over the weekend as saying the revisions would cover a sale of TikTok. ByteDance said on Sunday it was aware of the new rules and would “strictly follow them”.

Discussions about a sale began when US President Donald Trump issued an executive order this month threatening to ban the app unless ByteDance sells its US operations in the coming weeks. Trump and other U.S. politicians have said the app poses a threat to national security. TikTok, however, denied the allegation and sued the Trump administration for the order, calling it “highly politicized.”

The app already has a handful of potential buyers, including Microsoft (MSFT) and Walmart (WMT), who said they were participating in negotiations on a potential deal. The technology firm Oracle (ORCL) would also be interested.

The pressure on TikTok right now is immense. CEO Kevin Mayer stepped down last week after less than four months on the job, citing the “profoundly changed” political environment.

China’s changes to its export control rules are a way for the country “To exert some influence on the situation,” said Anupam Chander, law professor at Georgetown University.

“This will cause any bidder to stop and wonder how to proceed,” he added.

– Steven Jiang and Selina Wang contributed to this report.

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