Highlights:
- China has recently updated its export control rules which to give it a say over the transfer
- ByteDance and its founder Zhang Yiming have faced public criticism in China
- Some internet users said they would stop using Douyin
On Thursday, the Chinese company ByteDance said that China will need to approve the proposed deal with the US tech giant Oracle for its TikTok application. ByteDance indicated that it is a bid to stave off a ban in the United States of America which could get complicated even further.
Oracle has submitted a proposal to the Trump administration which will allow it to become a technology partner in the TikTok application, as the Chinese firm ByteDance hopes to head off the Trump order which will lead to divesting TikTok’s US operations.
The proposal envisages making TikTok a company whose headquarter is in the United States of America.
However, on Wednesday, the President of the US Donald Trump raised questions on ByteDance’s plans on keeping a majority stake in TikTok’s US operations and said that he does not favor the idea of a Chinese company retaining control after 6 Republican lawmakers urged him to rubbish the proposal submitted.
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Donald Trump had said that he would completely ban TikTok’s operations in the United States as early as Sunday, 20th September 2020, if ByteDance fails to comply amidst the US concerns that the firm could send the user data to China’s Communist Party government.
An outright sake of TikTok’s operations or technologies was not included in the proposal from ByteDance to the United States of America, the Chines state-run media reports on Thursday citing a separate statement from the firm.
When a leading global news agency, Reuters, tried talking to ByteDance on the development, the company declined to make any comment.
On the same day when asked about ByteDance’s comments on the need for approval from the Chinese government, the foreign ministry urged the United States to respect the principles of the market economy and fair competition and stop politicizing the normal economic and trade cooperation.
Towards the end of last month, China updated its export control rules which now enable it to have a say over the transfer of technology such as TikTok’s user recommendation algorithm to the foreign buyers.
Reuters reported that the deal from the US tech giant Oracle would not require ByteDance to apply to Chinese authorities for an export license for the algorithm used by TikTok.
Both ByteDance as a firm and its Founder Zhang Yiming are facing public criticism in China for seeming to give in to the pressure from the United States after it was reported it was contemplating a sale of TikTok’s US operations to Microsoft.
Some internet users went ahead and said they would stop using Douyin, ByteDance’s Chinese version of TikTok.
Mark Natkin, Managing Director (MD) of Marbridge Consulting said, “ByteDance, as it works to find a solution to keep TikTok’s US business alive, is walking a tightrope between the demands of the US government on the one side and the expectations of both the Chinese government and public on the other,”.
“It can’t afford to make any missteps along the way,” he added.
