Friday, 24 March 2023

China reminds US that it can and will kill a forced TikTok sale

by Earn Media

China pushed back against the U.S. government’s proposal to force a sale of TikTok on Thursday, rejecting the possible solution to ongoing national security concerns around the app.

TikTok CEO Shou Zi Chew appeared before Congress on Thursday morning, facing questions from U.S. lawmakers that centered around concerns that the Chinese government could leverage the app’s data to surveil American citizens or otherwise undermine national interests.

In a press conference hours before the hearing began, China’s Commerce Ministry spokesperson Shu Jueting weighed in with Beijing’s opposition to the Biden administration’s proposal. “…Forcing a sale of TikTok will seriously damage the confidence of investors from all over the world, including China, to invest in the United States,” she said. “If the news is true, China will firmly oppose it.”

The idea to force the company to divest itself of Chinese ownership first surfaced during the Trump administration, culminating in a deal for TikTok to sell its U.S. operations to Oracle in late 2020. At the time, TikTok also rejected an acquisition offer from Microsoft, though ultimately neither company succeeded and the strange arrangement fizzled after a series of successful legal challenges. The deal was shelved indefinitely when the Biden took office the following year, but in recent days the administration has picked up the languishing mission to force a sale.

In rejecting the U.S. proposal, which the Committee on Foreign Investment in the U.S. (CFIUS) would spearhead, China is reiterated a point it made during the Trump administration.

In late 2020, China’s Ministry of Commerce updated its export rules, expanding its control over AI technology as a category. China’s state news agency Xinhua followed the change by suggesting that the new rules could apply to ByteDance, which leverages AI to serve algorithmic content on TikTok, and quoting a scholar who advised companies with relevant deals to “halt negotiations.”

At the time, ByteDance quickly issued a statement asserting that it would “strictly follow” the new export regulations. That commitment — and the fact of China’s regulatory control — could undermine Chew’s ongoing testimony emphasizing TikTok’s independence.

On Thursday, China also pointed to the adjusted export rules, suggesting that even if the U.S. succeeded in forcing a sale and clearing domestic legal hurdles, China could step in and kill the deal at will.

“The sale or divestiture of TikTok involves technology export, which must follow China’s regulatory approval procedures,” Shu said. “The Chinese government will make a decision in accordance with the law.”

China reminds US that it can and will kill a forced TikTok sale by Taylor Hatmaker originally published on TechCrunch