Content creators who create and post short videos on TikTok are concerned about President Donald Trump’s plans to ban the Chinese-owned app that has been a source of national security and censorship concerns. (Aug. 11)

AP Domestic

ByteDance continues talks with the U.S. government in an attempt to reach a deal that will allow its app TikTok to continue operating in the U.S. and the parent company to maintain a small stake in its operations here. 

The discussions continue with an approaching Sept. 20 deadline, the date President Trump’s Aug. 7 executive order required ByteDance to have shed TikTok’s U.S. operations. Subsequently, Trump issued another executive order on Aug. 14 giving the company 90 days for a deal to be completed.

Trump had cited “credible evidence” that the Beijing-based media and tech company’s music and video sharing app may share user data with the Chinese government as reasons for the actions.

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Suspected front-runners for the U.S. TikTok operations include Microsoft, which has gained Walmart as a partner, and Oracle. A U.S. company would control any data generated by U.S. users of TikTok, which would amount to a treasure trove of information about users’ behaviors and interests.

But ByteDance is still hoping to hold a small stake in the U.S. operations, a person familiar with the discussions told USA TODAY.

Discussions about such an outcome have increased recently since China toughened its technology export rules, The Wall Street Journal reported Wednesday. 

The sale talks, which appeared imminent as August came to a close, apparently became complicated by the issue of whether TikTok’s core algorithms were part of the deal. China’s export restrictions on artificial intelligence technology could require its government approval for a deal to go through.

The core algorithm is a “key asset” that any buyer of the U.S. operations would want and ByteDance is likely attempting to get a license from the Chinese government for the U.S. buyer, Wedbush Securities analyst Daniel Ives said in a note to investors last week.

“ByteDance (and its Board) is in a race against the clock to find a solution with Chinese officials and get a deal inked, otherwise the plug could get pulled on TikTok in the U.S. which would be a draconian scenario with long lasting valuation/user implications down the road,” he said.

TikTok, Microsoft and Oracle declined comment on The Wall Street Journal report.

Also, TikTok has filed a lawsuit claiming the Trump the administration “ignored our extensive efforts to address its concerns” and that its Fifth Amendment right to due process had been deprived.

TikTok, known as Douyin in China, was developed by the Chinese company ByteDance in 2016. The Beijing-based media and tech company bought the teen-focused social app the following year, and the company merged the two apps in 2018.

Originally a home for wacky music-filled amateur videos, TikTok has rapidly grown its own roster of influencers and attracted stars such as Alicia Keys, Dua Lipa, Justin Bieber, Katy Perry and Snoop Dogg – and built a U.S. audience of 100 million.

Follow Mike Snider on Twitter: @MikeSnider.

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