TikTok and Tit for Tat

September 1, 2020

We were thinking about going with the headline “For Whom the Bell Tolls” but TikTok is a what not a whom.  Sincere apologies to Metallica.
Everything was finally looking just peaches for a sale of TikTok’s U.S business to a bidder.  Why?  Well, they said that they had selected a bidder and would announce who it was on Tuesday.
But the Chinese government had to throw a monkey wrench into the machine.  Or did they? 
What did China ban
On Friday, China’s Ministry of Commerce released regulations restricting the export of certain artificial intelligence technologies to foreign companies, according to the Associated Press.  Oops, TikTok has a U.S. subsidiary, and TikTok uses AI to deliver all those funny videos to its users.
TikTok has some cool AI technology
Although the algorithm is shrouded in secrecy, in a blog post a few months ago, TikTok finally raised the curtain and shared some details about the “For You” algorithm that serves up videos to users in a company blog post.
Essentially, the For You algorithm is a sophisticated type of recommendation system.  Recommendation systems have been around for a while now, think Netflix’s recommended movies or Google’s autocompletion of search queries.
Oh, so now what?
The prospective buyers of TikTok’s U.S. assets include Microsoft and Walmart, and apparently Oracle (wha?).  Larry Ellison has to get some, still.  The companies refused to comment of course, but it’s likely that the pace of the deal closing will be slowed down.
Why did China do this?
Politics is the obvious answer.  It’s no secret that the Trump administration has been sparring with China since its inception in 2016, and TikTok is another chapter in the saga.  But there is some speculation that China’s latest move is all about the Benjamins.  By increasing the regulatory red tape to closing the deal, China may be jockeying to fetch a higher price for the company.  As always, when in doubt, it’s probably a safe bet to follow the money.

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