TikTok sale hits snag as China places restrictions on tech sales


A symbol of TikTok (Douyin) is pictured at The Place shopping mall at dusk on August 22, 2020 in Beijing, China.

VCG | Visual China Group | Getty Images

A deal for TikTok’s U.S. business is facing new hurdles as the U.S. deadline for a sale approaches, putting the app in danger of facing an effective ban.

An announcement of a deal was expected as soon as Sept. 1, CNBC previously reported, but that day came and went with no news of a transaction. On Friday, Chinese officials had introduced new restrictions on technology exports that could require Chinese approval for TikTok to sell its algorithm, which is part of the core value of the app.

As of Monday, Oracle and a joint bid from Microsoft and Walmart were the top contenders for the sale, but The Wall Street Journal reported late Tuesday that China’s new restrictions had complicated and extended deal talks. A deal with the algorithm had been expected to fall in the $20 billion to $30 billion range, sources previously told CNBC. That price would likely drop if the key technology could not be included.

The new rules out of China have prompted Zhang Yiming, founder of TikTok’s parent company ByteDance, to reconsider his options, Bloomberg reported Tuesday. The need for approval from officials in both U.S. and China could push the deal past the November U.S. presidential election, a source familiar with the matter told Bloomberg.

If deal talks extend into November or later, the app could face an effective ban in the U.S. under President Donald Trump’s executive orders. Trump initially signed an order that would bar U.S. businesses from transacting with ByteDance as of Sept. 20, but later signed an order forcing ByteDance to sell or spin off its U.S. TikTok business by Nov. 12.

A potential change in administration after Election Day could give TikTok another chance to negotiate with the U.S. government. TikTok has sued the Trump administration over the ban, claiming it denied the company due process.

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