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The act of offering core algorithm services to overseas branches constitutes an export of technical services.
Regarding the selling of TikTok’s operation in the United States, its parent company ByteDance will need to comply with approval procedures under China's latest revision to the catalogue of technologies that are subject to export bans or restrictions
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“As a fast-growing innovative enterprise, ByteDance has many cutting-edge technologies in artificial intelligence and other fields, and some technologies may have been covered by the adjusted catalogue,” the University of International Business and Economics Professor Cui Fan told Xinhua.
The revised catalogue, released jointly by the Commerce Ministry and the Science and Technology Ministry, added 23 items subject to export restrictions.
Two new items under the category of information processing technology in the computer service industry were cited by Cui as relevant in the TikTok deal, which was the "personalized information push service technology based on data analysis" and "artificial intelligence interactive interface technology."
The rapid development of ByteDance's international businesses has been built on the strong technical support based in China and the company's act of offering core algorithm services to overseas branches constitutes a typical export of technical services.
Trump says they're bringing manufacturing back home. But what I'm hearing from some tech companies is that they're moving out of China and to other foreign nations that are not involved in a trade war with the U.S. #RepublicanNationalConvention pic.twitter.com/gwNZyThEmV
— Lance Ulanoff (@LanceUlanoff) August 28, 2020
"For the international business to continue to operate smoothly, no matter who its new owner and operator are, it is highly likely that there will need to be a transfer of software codes or right of use from inside China to outside China," Cui said, explaining that technical services provision from inside China to outside China may also be needed.
Therefore, ByteDance should "carefully study the revised catalogue, seriously and carefully consider whether it is necessary to suspend substantive negotiations on relevant transactions, comply with statutory application and reporting procedures, and then take further actions as appropriate," Cui said.
The sale of TikTok is another chapter in the trade war unleashed by U.S. President Donald Trump against China. On August 6, I have prohibited any transaction or business with ByteDance arguing that TikTok is a threat to the national security of their country.
On August 24, the Chinese social network sued the Trump administration stressing that national security concerns are not "authentic."
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