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US-China tensions

China's new AI export curbs threaten TikTok's US sale

Popular video app's powerful algorithm likely to face 'dual-use' restrictions

China's ByteDance is under pressure to divest its popular TikTok video-sharing app in the U.S. ahead of a Nov. 12 deadline imposed by President Donald Trump.   © AP

HONG KONG -- Beijing has added several artificial intelligence technologies to its export control list, casting a shadow over the pending U.S. sale of the hugely popular streaming app TikTok by China's ByteDance.

On Friday night, the Ministry of Commerce released an updated export control list including "personalized content recommendations based on data analysis" and several other technologies under the category of dual use, implying they could potentially have both civilian and military use and that their sale overseas will be restricted.

The revised list did not name TikTok specifically but the streaming app, which has attracted millions of users worldwide by suggesting videos to them based on understanding their viewing preferences, is known for its powerful algorithm.

TikTok did not immediately respond to a request for comment from the Nikkei Asian Review. It is unclear when the revised list will take effect.

The new rules come as ByteDance fast approaches a Nov. 12 deadline to sell its U.S. business to an American buyer or see it forced to shut down. President Donald Trump has issued an executive order to ban TikTok from the U.S. market, citing national security concerns, but ByteDance is challenging this in court.

Kevin Mayer, who resigned as TikTok's chief executive this week, said in an email to employees that ByteDance will soon "reach a resolution" to its regulatory dispute with U.S. authorities, hinting a signed deal is on the horizon.

Microsoft has expressed interest in buying TikTok's operations in the U.S. and several other markets and last week Walmart joined its bid. 

Other bidders reportedly include Oracle as well as ByteDance's existing American investors which include the private equity fund General Atlantic. On Friday, Triller, a rival U.S. short video service, said it had put in a $20 billion bid for TikTok together with British fund manager Centricus Asset Management. 

TikTok, combined with its Chinese version, Douyin, is one of the world's most popular apps, with more than 2 billion global downloads as of April, according to app tracker Sensor Tower.

"As with any new regulation in China, it will take some time to understand the practical implications and how regulators might interpret it as it applies to specific transactions," said Ross Darrell Feingold, a Taipei-based lawyer and political risk analyst who advises multinational companies on China-U. S. relations.

"The larger meaning of the new restrictions might be that China's government wants to take a wait-and-see approach to what future actions the United States and other governments might take in the increasingly regulated hardware and software industries.

"Proactive restrictions, which, in the absence of export approvals [are] in reality a ban on certain AI exports, help Chinese companies avoid a future TikTok-like situation," Feingold said. 

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