Partnerships / Acquisitions

TikTok Sale Stalls Over Algorithm Uncertainty

TikTok Sale Stalls Over Uncertainty If App's Core Programming Is Included

After China created new limitations on the export of artificial intelligence (AI) technology, a potential deal for TikTok’s American operations is facing a hurdle as it is uncertain if the programming code at the heart of the app can come with the arrangement, The Wall Street Journal reported, citing unnamed sources.

The programming code decides which content gets provided to those who use the app and is viewed as an instrumental part of the app.

One unnamed source in the report compared TikTok without its codes to a high-end automobile that has an inexpensive engine. Another unnamed source in the report said it would be unexpected to not get the programming code and the arrangement might not go ahead if the code is not involved.

Each side is now aiming to discern if the AI mandate requires that the government of China give the go-ahead to transfer the programming code, and if Beijing would give the green light in that event. The probability that arrangement could arrive in the near future has been reduced by the intricacy.

ByteDance, the parent company of TikTok, has noted that it would follow the mandate from the government of China. It is also looking to have Beijing clear up how to proceed with a transaction in the event the new limitations include its programming code.

President Donald Trump put forward an executive order in August prohibiting American companies from conducting business with ByteDance and ordered its sale to a U.S. company. The president has claimed the app presents natural security risks as the firm could provide information about users to the government of China.

However, Gao Feng, a Chinese Commerce Ministry spokesperson, said at a press conference that the claims are without merit.

AI infrastructure such as text recognition, speech and data analysis were added to the list of export-control products by the Ministry of Commerce with the Chinese government’s new regulations.

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