China prefers to see TikTok U.S. closed rather than a forced sale. Chinese authorities fear that a sale would "make" ByteDance and...
China prefers to see TikTok U.S. closed rather than a forced sale. Chinese authorities fear that a sale would "make" ByteDance and China "look weak".
President Donald Trump said last Thursday that he had no plans to extend the deadline for ByteDance to sell TikTok's U.S. branch, as the process is still fraught with uncertainty. Trump has repeatedly stated that the deadline for the sale is September 15, 2020, although that is not the date stipulated in one of the two executive orders his administration issued in August.
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The first executive order, which prohibits U.S. companies from doing business with the Chinese company or its subsidiaries, gave a September 20 deadline. The second, with a November 12 deadline, requires Bytedance to sell TikTok for national security reasons. Microsoft and Oracle are among the contenders for TikTok's US assets. Operations in Canada, New Zealand and Australia are also part of the agreement.
On 31 July, Trump told journalists for the first time that he planned to ban TikTok in the United States within 24 hours. But on August 3, after Microsoft revealed that it was in talks to buy parts of TikTok, Trump said it would give ByteDance 45 days to sell to an American buyer. Then, on August 6, Trump issued an executive order prohibiting transactions with ByteDance and its subsidiaries within 45 days, on September 20.
Who has to approve a deal?
ByteDance and potential buyers of TikTok must propose an agreement acceptable to the Committee on Foreign Investment in the United States, an interagency group. The Trump administration does not want ByteDance to have a continuing interest in TikTok, and expects a technology company to be the lead investor in the short video application. China's Ministry of Commerce joined the party on 28 August with a revised technology export control list that experts say would allow it to control any TikTok transaction.
This means that Beijing's approval will probably be needed as well, which many observers doubt will happen immediately. The rules state that it can take up to 30 days to get preliminary approval to export the technology. Last week, when asked what impact the rules might have on the TikTok agreement, China's trade ministry replied that the regulatory changes were not targeted at specific companies, but reaffirmed their right to enforce the rules.
However, Beijing opposes the forced sale of TikTok's US operations by its Chinese owner ByteDance and would prefer to see the short video application closed in the US, three people with first-hand knowledge of the issue said Friday. Chinese officials believe a forced sale would make ByteDance and China appear weak in the face of pressure from Washington, the sources said, speaking on condition of anonymity given the sensitivity of the situation.
ByteDance told Reuters that the Chinese government has never suggested closing TikTok in the United States or any other market. Two of the sources said China is prepared to use its August 28 revisions to a list of technology exports to delay any deal struck by ByteDance if it were to do so.
Asked Friday about Trump and TikTok, Chinese Foreign Ministry spokesman Zhao Lijian said at a regular press briefing that the United States was abusing the concept of national security, and urged it to stop oppressing foreign companies.
If no agreement is reached by September?
If the deadline is not extended, transactions with TikTok will be prohibited, although the exact nature of these transactions has not been specified. The decree could make advertising on the platform illegal and TikTok has prepared advertisers for such an outcome. The United States is likely to ban the downloading of TikTok from app stores, Reuters reported.
However, it is unclear whether certain transactions can be banned that would prevent users who have already downloaded TikTok from using it. Faced with a ban in India, TikTok has chosen to close down voluntarily.
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Does Tiktok have other options?
TikTok and ByteDance filed a lawsuit in federal court in Los Angeles on August 24 against Trump's decree, calling it a pretext to fuel anti-Chinese rhetoric. On August 14, the Trump administration issued another executive order requiring ByteDance to divest its interest in the video sharing operations of the TikTok application in the United States within 90 days. This suggests a deadline of November 12. The second executive order does not say what could happen if ByteDance does not comply.