TikTok sale to Walmart/Microsoft could be scrapped by new Chinese restrictions

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TikTok’s sale in the US is set to be delayed or even blocked entirely as China imposes new restrictions on technology exports.

China’s government updated its list of “forbidden and restricted technology exports” last Friday to include the social media giant’s algorithm.

This has thrown a spanner in the works for both TikTok’s owner ByteDance and Microsoft and Walmart, who have put forward a joint offer for the social media platforms US operations.

ByteDance is already under pressure to reach a deal before the Trump administration’s 90-day deadline is reached and the app will be banned entirely from the US.

READ MORE: Walmart joins Microsoft to make $30bn bid for TikTok

However, this new legislation from China has made a deal much harder, potentially extending talks long past the US election in November and Trump’s deadline.

China’s legislation makes selling “personalised information recommendation services based on data analysis”, which include TikTok’s algorithm, heavily restricted but not entirely banned.

According to Reuters there are numerous options available to ByteDances and the app’s prospective buyers.

The first is to sell TikTok without its algorithm, though this is part of the core value of the app and is expected to dramatically reduce the expected $30 billion asking price.

The second is to seek approval from the Chinese government to sell the technology to a chosen company, giving them far more control over the process than would previously have been granted.

Another option would be for the buyer to license the algorithm instead of buying it outright, an option few believe is likely to be approved by either government.

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