Microsoft Corporation (NASDAQ:MSFT), Walmart Inc. (NYSE:WMT), and Oracle Corporation (NYSE:ORCL) have been dealt a big blow in their push to acquire viral video-sharing app TikTok. Immediate reports indicate that ByteDance, the parent company behind the app, must seek authorization from China to complete any transaction that will result in the sale of the video-sharing app.
Chinese Government TikTok Stance
The Chinese government has reportedly imposed new restrictions on the exportation of artificial intelligence technology as it seeks to block the sale of one of its biggest exports. The new requirements cover all the technologies that ByteDance uses in TikTok, which has seen it attract a user base of more than 100 million users in the U.S.
TikTok has risen to become one of the most valuable networking apps in the social networking space on leveraging artificial intelligence on speech and text, therefore, enhancing personalized content recommendation. The timing of the new requirements does not come as a surprise.
China is entangled in a fierce standoff with the U.S over national security concerns and claims of technology stealing. With the U.S warning of blocking the listing of Chinese companies in the U.S markets and delisting some of over national security concerns, Beijing might as well have found a way to hit back.
The U.S has already blocked Huawei from operating in the U.S a move that escalated tensions with the U.S. A move by President Donald Trump to issue a 45-day executive order for TikTok to seek a U.S acquisition to continue operating in the U.S did not go well with Beijing.
President Donald Trump insists that ByteDance must sell TikTok U.S operations to a U.S company, given the risks it poses on National security. According to the administration, the apps’ close ties to the communist party of China poses a significant danger to U.S users.
TikTok Acquisition Push
Microsoft and Oracle have already offered to acquire TikTok as they seek to expand their footprints into the social networking space. Walmart is the latest U.S Company to show interest in acquiring the viral video sharing app but in partnership with Microsoft. Centricus Asset Management and Trillera are other players to have shown interest with reports indicating they are willing to pay close to $20 billion for TikTok.
ByteDance, on its part, maintains it is aware of the new regulations and will be looking to comply with them. However, it finds itself in a tough spot, given that the 45-day limit for a deal in the U.S is slowly coming to an end. After the expiry of the 45 days, TikTok will no longer be operational in the U.S if not acquired by a U.S company. Similarly, the company must also ensure it pleases Beijing with any decision it makes.
Early indication is that China’s approval, of any deal, could be delayed until after the November U.S election. China is hoping that a regime change in the U.S would lead to the easing of tensions between the two countries to allow its companies to operate freely in the U.S.