TikTok deal runs into fresh roadblock over algorithms

TikTok's algorithm is considered to be the platform's secret sauce...

What you need to know

• TikTok faces yet another roadblock in its sale process.
• There are now questions over whether TikTok's algorithm can be included as part of the deal.
• It comes after the Chinese government made rule changes regarding selling technology to foreign buyers.

TikTok's acquisition process has hit another roadblock after questions emerged over whether the app's algorithms can be included as part of the deal.

According to The Wall Street Journal:

Deal talks for TikTok's U.S. operations have hit a snag over the question of whether the app's core algorithms can be included as part of a deal, according to people familiar with the matter.

The algorithms, which determine the videos served to users and are seen as TikTok's secret sauce, were considered part of the deal negotiations up until Friday, when the Chinese government issued new restrictions on the export of artificial-intelligence technology, according to people familiar with the matter.

The news comes after the Chinese government updated rules regarding the sale of technology to foreign buyers. The changes could mean that any deal which includes the sale of TikTok's algorithms (considered to be the app's "secret sauce) would need to be signed off by Beijing, casting doubt on whether it would approve the deal.

TikTok's parent company ByteDance has stated it will abide by the rule changes, but the report notes that the complexity involved "has reduced the chances that a deal could be completed soon."

Reports say ByteDance is seeking clarity from Beijing on how to proceed regarding this new development.

Reports last week suggested the deal was a mere 48 hours away, however, the recent changes have clearly derailed the acquisition process, where Microsoft is reported to be a frontrunner to buy the app.