Sep 2, 2020 - Technology

Chinese export rules add new complication to TikTok Rubik's Cube

a rubix cube with tiktok pictures
Illustration: Aïda Amer/Axios

TikTok is less than two weeks away from President Trump's deal-or-death deadline, but a transaction is feeling even further away than when he first made his threat.

Driving the news: China's new tech export rules could prevent ByteDance from including TikTok's algorithm in its sale of TikTok, which is akin to McDonald's selling a Big Mac without the meat.

Between the lines: This deal was already difficult before Beijing intervened, but at least companies like Microsoft and Oracle knew what they were bidding on. Now it's less clear, even to ByteDance, thus creating trickle-down troubles for everything from pricing to deal structure.

  • A Chinese government official on Monday accused the U.S. of "outright bullying.”
  • Adding yet another layer of complexity, Trump yesterday reiterated his extortionary insistence that the U.S. "has to be compensated, well compensated" for approving a sale.
  • There still doesn't appear to be any buyside appetite for such a payment, with sources hoping Trump will rhetorically save face by pointing to deal-related tax payments.

Of note: That doesn't mean there won't be a deal, because saying anything with certainty about this situation would be folly.

The bottom line: TikTok has become a lot like a Rubik's Cube, a multi-sided puzzle that often involves a long series of counterproductive twists. Most players eventually give up, angry at themselves for even taking the time. But, every once in a while, all of that frustration gives way to an epiphany.

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