A New Hurdle In The U.S’ Dream To Win TikTok?
Earlier in January this year, the United States said that companies that export certain types of geospatial imagery software from the U.S must apply for a licence to send it overseas. However, the firms do not require a licence if they are shipping it to Canada.
Previously, the U.S had imposed other trade restrictions that impacted the artificial intelligence i.e., AI world, including a ban on American firms from doing business with Chinese companies that produce software and hardware that power AI surveillance.
China’s Move
Last Friday, China’s Ministry of Commerce updated its export control categories to cover artificial intelligence technologies. AI interface technologies like speech and text recognition and those that assess data to make personalised content recommendations were added to the revised list.
The export of such services is restricted, not banned, and this means that companies that utilise this technology may still be able to sell them abroad. However, they would have to apply for government approval, which can take up to 30 business days, according to the regulations.
Blocking The TikTok Deal?
Though not explicitly stated, it is said that this move has been done by China to make it difficult for U.S companies to make a deal with TikTok. Just think about it. The move to restrict the export of AI was done by the U.S in January but China chose to come up with its own rule in August. The timing is definitely suspicious.
Also, AI is what powers TikTok and if China’s new rules restrict the export of AI, then doesn’t this complicate the entire process of acquiring the short-video app.
This rule may scare off potential buyers because whoever wants to buy TikTok’s algorithm would have to sit down with China for negotiations. On the other hand, this might also help ByteDance by providing it some leverage by allowing it to stretch out its talks with the U.S.
In an article written by Financial Times, it is said that if China doesn’t approve the sale of TikTok’s algorithm, then, the U.S buyer might be responsible for content moderation policy and user data while ByteDance would control the recommendation algorithms. But this doesn’t make sense as well, the article adds. Because, if the original code is going to stay with ByteDance, what is the point of acquiring TikTok’s U.S operations, when you, as a buyer, will not have access to the core element that powers the app.
This move by China presents a problem to Trump’s wishes of pushing ByteDance to sell TikTok’s U.S operations to an American company. The Trump administration could extend the deadline for the sale or ban the app. However, banning the app might make Trump unpopular among teenagers ahead of the 2020 presidential elections, as they are the ones who are fans of the app.
So, will a U.S company come forward despite all this and acquire TikTok? Or will China block the deal and don’t offer TikTok’s AI to the U.S company? But the most important question is if TikTok can not be acquired, can any other American tech company develop an app that is better than TikTok?
Head to moneyguru’s Insight section to stay updated on all major financial news updates of the day!
