China wants to keep TikToks algorithm secret

Sales of the popular app in the USA seem to be almost certain. After all, otherwise the US government threatens a complete ban. But as it now turns out, China is interfering in the sales negotiations. A resale of the TikTok algorithm is to be prohibited.

The Chinese government is (officially) active

The headlines around the App TikTok and US president Donald Trump simply don’t stop. During the week-long hick hack between the US government and the developer Bytedance, the other political side is now also getting involved. For example, the Chinese government has unceremoniously updated its export restrictions.  This list now also includes algorithms. In particular one can read from the restrictions that from now on the sale of “personalized technologies based on data analysis” is prohibited. Conversely, China now prohibits the sale of any technology that relies on corresponding algorithms. This has significant consequences for the sales negotiations between Bytedance and the interested parties. After all, the interested parties are of course mainly interested in the algorithm of the extremely successful app.

The interest of the buyer could decrease

Initially, only Microsoft was considered as a potential buyer of TikTok, but over time other US companies joined in. Only a few days ago, it became known that software giant Oracle was also interested in buying TikTok. Meanwhile, even the supermarket group Walmart is negotiating with TikTok developers from Bytedance. However, it is questionable whether the interest still exists in view of the changed restrictions. Bytedance will probably be annoyed by the fact that the purchase price will almost certainly go down in the cellar as a result of the algorithm’s sales ban. After all, this is the heart of TikTok.

What makes the algorithm so valuable?

One of the great features of TikTok is the interest analysis of the users. Thus, the app seems to have the ability to know the preferences of each individual user in a customized way. This of course increases the useful life immensely. Finally, after watching a video, the user finds the following short video also interesting. In the best case (for Bytedance), the user then finds himself in a spiral in which he consumes video after video with pleasure. If TikTok could not offer this effective usage analysis, the app would not be nearly as successful as it is today. Therefore, without the algorithm, Bytedance will only be able to sell the app’s current reach. The future potential that the algorithm enables cannot be included in the sales negotiations.

Simon Lüthje

I am co-founder of this blog and am very interested in everything that has to do with technology, but I also like to play games. I was born in Hamburg, but now I live in Bad Segeberg.

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