What Happened: Chinese authorities have imposed new regulations on technology exports which could complicate matters for the TikTok deal, WSJ reported on Saturday.
As per the latest directives from the Chinese authorities, computing and data-processing technologies, voice and speech recognition, content recommendation and text analysis technologies cannot be exported without a proper license from local Chinese authorities.
Why It's Important: ByteDance Ltd., the owner of the video-sharing app TikTok, is under tremendous pressure from the White House to quickly divest its U.S. operations of Tiktok. The company is also exploring legal options to challenge the executive order from President Trump which bars any U.S. companies to deal or get into any form of transactions with the Chinese company.
President Trump, however, gave a green light to Microsoft Corporations (NASDAQ:MSFT) to go ahead with the TikTok deal only if the White House gets a sizeable cut from it.
The U.S. security officials earlier raised concerns about the user data in possession of ByteDance fearing they would be passed on to Chinese Intelligence agencies.
It is interesting to note that along with Microsoft, Walmart Inc. (NYSE:WMT) and Oracle Corp. (NYSE:ORCL) also expressed interest to acquire the U.S. operations of the video-sharing app. Much of their interest can be attributed to the algorithm of ByteDance’s AI-driven-content-recommendation engine, according to WSJ.
What Next: The addictive video feed is the most attractive feature of the app as it analyzes the user behavior and recommends them suitable videos keeping them hooked to the app. Amid the recent regulations, ByteDance would not be able to deliver the user feed algorithm to the acquiring company without obtaining a license from the local Chinese authorities.