ByteDance Applies for Tech Export License in China

ByteDance Applies for Tech Export License in China amid Country’s New Requirements

| Updated
by Darya Rudz · 3 min read
ByteDance Applies for Tech Export License in China amid Country’s New Requirements
Zhang Yiming, ByteDance Founder & CEO. Photo: Depositphotos

ByteDance is now in talks with Oracle Corporation and Walmart Inc over the acquisition of TikTok. Approval of both the U.S. and Chinese governments is necessary. 

TikTok parent company ByteDance has reportedly applied for a tech export license in China. The company submitted the application following China’s revision of its list of technologies subject to export bans or restrictions. While ByteDance is waiting for the decision of Beijing’s municipal commerce bureau over the tech export license, there are rumors about the connection between the application and the ongoing deal over TikTok’s U.S. operations.

In August, China revised a list of technologies banned or restricted for export for the first time in 12 years. The initiative gave Beijing a say over any deal between Chinese companies aiming to partner with a foreign entity, including TikTok’s one. The company is now in talks with Oracle Corporation (NYSE: ORCL) and Walmart Inc (NYSE: WMT) over its acquisition. Approval of both U.S. and Chinese governments is necessary.

However, there are serious issues in reaching any agreement. According to China-based newspaper The Global Times, Beijing is unlikely to approve an ‘unfair’ deal between the companies. As the source has explained, the deal terms are unfair. It caters to the unreasonable demands of Washington, which casts doubts on the likelihood of Beijing assenting to such deals.

According to the Chinese state news agency Xinhua, TikTok’s experience is “a textbook example of the United States’ modern-day piracy and tech bullying”. Besides, the source called the national security concerns of Washington over TikTok “nothing but a fig leaf”.

It said:

“It is time that other countries saw through the outrageous farce of the TikTok drama, knew what is really at stake, and joined hands to oppose such blatant robberies and maintain a fair global business environment”.

While ByteDance is planning to establish a U.S. subsidiary called TikTok Global with an 80% stake, Oracle and Walmart want to keep the ownership in American hands.

Potential TikTok Buyers

With the outbreak of the U.S.-China trade war, TikTok got into hot water over data security issues. The U.S. President Donald Trump administration announced plans to ban the TikTok and WeChat apps on the premise that they are used to gather data on Americans for use by Beijing. Following the news, some companies showed interest in buying the U.S. operations of TikTok. Microsoft Corporation (NASDAQ: MSFT) was one of the first ones, and the potential deal seemed to bear fruit. However, the companies failed to sign an agreement.

In addition, TikTok parent ByteDance held negotiations with Indian Reliance Industries on the app’s future. Then, there appeared information about Oracle and Walmart looking for the acquisition. The former turned out to be the frontrunner, and now it is waiting for the government to review the deal. Notably, the proposal from Oracle doesn’t include a complete buyout of TikTok U.S. operations. Instead, it would serve as a trusted technology provider. It would provide the Cloud infrastructure to house the video app’s data.

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