TikTok deal hits roadblock over core algorithms

New export restrictions could hamper the sale of TikTok’s U.S. operations

Smartphone with TikTok opening screen on it in front of an American flag

Talks to purchase TikTok’s U.S. operations have hit a snag over whether the acquisition would include the app’s core algorithms, those familiar with the matter have told The Wall Street Journal.

Bidders considered TikTok’s algorithms part of the deal negotiations until China tightened restrictions concerning artificial intelligence (AI) technology exports last week. Now, TikTok is trying to determine if this means the Chinese government must approve the algorithms’ transfer and whether or not it would sign off on it if it’s required. 

ByteDance, TikTok’s parent company, said it would comply with the Chinese government’s order. According to sources, the company is also seeking clarification from Beijing on how to proceed with a sale if the new restrictions apply to TikTok’s algorithms.

For bidders, TikTok’s algorithm is the secret sauce and, according to what sources have to say, buying the app without the algorithm drastically changes what the companies are bidding for. Some have suggested a bidder could still purchase TikTok for its user base and develop new algorithms for the app.

TikTok is in talks with multiple bidders. Microsoft and Walmart have teamed up to court the popular app. Oracle has also submitted a bid and formed partnerships with ByteDance’s investors, including Sequoia Capital, General Atlantic and Coatue Management. Meanwhile, Triller, a TikTok competitor, has reportedly submitted a bid to purchase TikTok’s stateside operations, though TikTok has denied the report.

ByteDance is reportedly seeking $30 billion for TikTok’s U.S. operations after President Donald Trump’s executive order effectively banned the app starting Sept. 15. Beijing retaliated to the order by adding content-recommendation technology to its list of export restrictions.

TikTok has experienced a surge in popularity in the U.S. and recently reached 100 million monthly U.S. users. Industry analysts attribute the app’s growth to its core algorithm that serves up different content types to people based on their preferences.

Featured Resources

B2B under quarantine

Key B2C e-commerce features B2B need to adopt to survive

Download now

The top three IT pains of the new reality and how to solve them

Driving more resiliency with unified operations and service management

Download now

The five essentials from your endpoint security partner

Empower your MSP business to operate efficiently

Download now

How fashion retailers are redesigning their digital future

Fashion retail guide

Download now

Recommended

Senator wants social media companies held liable for spreading anti-vax lies
social media

Senator wants social media companies held liable for spreading anti-vax lies

23 Jul 2021

Most Popular

The benefits of workload optimisation
Sponsored

The benefits of workload optimisation

16 Jul 2021
RMIT to be first Australian university to implement AWS supercomputing facility
high-performance computing (HPC)

RMIT to be first Australian university to implement AWS supercomputing facility

28 Jul 2021
Samsung Galaxy S21 5G review: A rose-tinted experience
Mobile Phones

Samsung Galaxy S21 5G review: A rose-tinted experience

14 Jul 2021