China's new AI trade rules could hamper a TikTok sale

The social network might not have access to technology it needs.

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China's flags are seen near a TikTok logo in this illustration picture taken July 16, 2020. REUTERS/Florence Lo/Illustration
REUTERS/Florence Lo/Illustration

TikTok’s attempt to sell itself and avert a possible US ban may run into some complications. The Wall Street Journal reports that China has unveiled new restrictions on AI technology exports that could affect TikTok. The new rules bar the exports of tech like content suggestions, text analysis and voice recognition unless a company receives a license — technology TikTok uses in some cases.

The Chinese government has issued a not-so-subtle warning to TikTok parent ByteDance in turn. Government advisor Cui Fan told the state-run Xinhua News Agency that ByteDance should “seriously and cautiously” consider stopping its sales talks for TikTok. Even if ByteDance no longer has a stake in TikTok, there would probably be some technology transfers that could violate the rules, the advisor said.

The country’s Ministry of Commerce argued that the export list changes were overdue after remaining the same since 2008. It was important given the breakneck pace of technological improvement and China’s increasingly competitive output, according to officials.

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Neither ByteDance nor the Commerce Ministry has commented on the new rules.

The move escalates an already intense dispute between China and the US. The two sides are already locked in a trade war, and the US has already implemented trade restrictions on companies like Huawei and ZTE over alleged security risks. The pressure on TikTok to drop ByteDance is an extension of this. In that regard, it’s not surprising that China is countering with tighter export limits. This theoretically pressures the US to make concessions and allow more access to Chinese tech.

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