ByteDance will not sell TikTok's U.S. operations to Microsoft or Oracle, nor will the company give the source code to any U.S. buyers, sources said.

On September 13th, Microsoft released a statement saying ByteDance would not be selling TikTok’s US operations to the company.

Soon after, reports started flourishing the internet claiming Oracle has won, and it is all set to acquire TikTok’s US operations. However, this seems to be false.

The latest report from CGTN claims that ByteDance will not sell TikTok’s US operations to Microsoft or Oracle. Plus, the company will not give the source code to any US buyers, sources said.

ByteDance rejects Microsoft's bid for TikTok

"ByteDance let us know today they would not be selling TikTok's U.S. operations to Microsoft. We are confident our proposal would have been good for TikTok's users, while protecting national security interests," Microsoft said in a statement.

Another bidder for the wildly popular social media platform, Oracle, is reportedly gaining the upper hand as its negotiations for TikTok's U.S. operations have intensified in recent days, according to a Wall Street Journal report on September 14, 2020 citing people with knowledge of the matter.

Oracle is going to be picked as TikTok's "trusted tech partner" in the U.S., the report said.However, the sources have confirmed that ByteDance will also not sell TikTok's U.S. operations to Oracle.

U.S. President Donald Trump set a deadline last month for TikTok to be sold to a U.S. company by September 15 or face a ban, citing national security reasons.

China released a revised catalogue of technologies that are subject to export bans or restrictions at the end of August, which means that ByteDance may have to obtain a license from the government to proceed with TikTok's sale to an American company.

ByteDance boasts a number of cutting-edge technologies in artificial intelligence and other spheres, and some technologies may have a close bearing on the adjusted catalogue.

"The newly-added article 21 over 'personalized information push service technology based on data analysis' and article 18 about 'artificial intelligence interactive interface technology' may have something to do with ByteDance," said Cui Fan, a professor of international trade at the University of International Business and Economics in Beijing.

The expert said it is a typical technical service export. "If ByteDance plans to export related technologies, it should go through the approval procedures," Cui said. "The company's rapid development in international business relies on its strong domestic technical support, and it continues to provide overseas companies with its latest core algorithm service."

TikTok filed a lawsuit following Trump's executive order. "We do not take suing the government lightly," TikTok said in a blog post. "However, we feel we have no choice but to take action to protect our rights."

Prompted by a series of changes to the company's structure "as a result of the Trump administration's action to push for a sell-off of the U.S. business," TikTok CEO Kevin Mayer resigned just months after becoming chief executive of the Chinese video-sharing app.

Zhang Yiming, chairman of ByteDance, parent company of TikTok, said the company is moving quickly to find solutions to the issues it faces globally. "I can assure you that we are developing solutions that will be in the interest of users, creators, partners, and employees," he said.

ByteDance picks Oracle as tech partner

A deal between ByteDance, the parent of TikTok, and Oracle appeared to be edging closer after reports that the Chinese company had chosen the software provider as its US technology partner. If the deal firmed up, it would help keep the popular video-sharing app running in the United States.

Oracle's prospects were boosted when bid rival Microsoft announced that Byte-Dance had rejected its offer to buy TikTok's US operations.

Reuters said on September 15 that Byte-Dance had abandoned the sale of TikTok in the US and decided to pursue a partnership with Oracle in hopes of avoiding a US ban threatened by US President Donald Trump. ByteDance would not give the source code for the platform to any US firm, the report said.

Amid fast-changing developments, Microsoft's exit from the scene came a week before Trump promises to follow through with his plan to ban the app in the US, if its assets there are not sold. Microsoft was the first to confirm it was courting TikTok. It had teamed up with the retailer Walmart to make its bid.

Under ByteDance's latest proposal, Oracle will be the firm's technology partner and assume management of TikTok's US user data, sources told Reuters. Oracle is also negotiating taking a stake in TikTok's US operations, they said.

The Trump administration has given a Sept 20 deadline for TikTok's US operations to be sold in order to avoid a ban.

TikTok denies it is a national-security risk, as claimed by the administration, and is suing to scuttle the ban.

Sale negotiations were upended when China updated its export control rules last month, giving it a say over the transfer of TikTok's algorithm to a foreign buyer. Reuters reported last week that China would rather see TikTok shut down in the United States than allow a forced sale.

Oracle said it was part of a proposal submitted by ByteDance to the U.S. Treasury Department over the weekend in which Oracle would serve as TikTok's "trusted technology provider." Oracle shares were up 6.3%.

Under ByteDance's latest proposal, Oracle would assume management of TikTok's U.S. user data, sources told Reuters on Sunday. Oracle is also negotiating taking a stake in TikTok's U.S. operations, the sources added. The TikTok user data is currently stored in Alphabet Inc's cloud, with a backup in Singapore.

Some of ByteDance's top investors, including General Atlantic and Sequoia, will also be given minority stakes in those operations, one of the sources said.

Any deal for the TikTok assets must be reviewed by the Committee on Foreign Investment in the US, a group chaired by the Treasury secretary that studies mergers for national-security reasons. The president can approve or deny a transaction recommended by the panel, though Trump has already voiced support for Oracle as a "great company" that could handle the acquisition.

TikTok's U.S. sale may entail China approval

Earlier before, China released a revised catalogue of technologies that are subject to export bans or restrictions, which may suspend ByteDance’s negotiations over the pending sale of its popular video-sharing app TikTo.

The revised catalogue, released on August 28th jointly by China's Ministry of Commerce (MOFCOM) and the Ministry of Science and Technology, added a total of 23 items subject to export restrictions while deleting four items prohibited from export, including microbial fertilizing and caffeine production technologies.

The catalogue also removed five items subject to export restrictions, including Newcastle disease vaccine technology and information security firewall software technology.

Cui Fan, a professor of international trade at the University of International Business and Economics in Beijing, said China has been revising laws in recent years to standardize technological imports and exports, such as forbidding forced technological transfer from foreign companies.

In the meantime, some new technologies China has developed will also be managed strictly over concerns over national security and public interests, he said.

Cui said some Chinese companies, such as ByteDance, could be affected by the new rule because its video-sharing brand TikTok is in the middle of selling its U.S. assets that involve new technology included in China's new restriction list.

"The newly-added article 21 over 'personalized information push service technology based on data analysis' and article 18 about 'artificial intelligence interactive interface technology' may have something to do with ByteDance," Cui noted.

ByteDance boasts a number of cutting-edge technologies in artificial intelligence and other spheres, and some technologies may have a close bearing on the adjusted catalogue.

Kevin Mayer, who resigned as TikTok's chief executive this week, said in an email to employees that ByteDance will soon "reach a resolution" in its regulatory dispute with U.S. authorities, hinting a deal is on the horizon.

"If ByteDance plans to export related technologies, it should go through the approval procedures," Cui said. "The company's rapid development in international business relies on its strong domestic technical support, and it continues to provide overseas companies with the its latest core algorithm service. It is a typical technical service export."

If its international business is to operate smoothly, no matter who its new owner and operator are, it seems a must for them to acquire software code or its usage rights from China, and it may also entail technical services from China to overseas, the expert added.

"Therefore, it is recommended that ByteDance seriously study the adjusted catalogue and carefully consider whether it is necessary to suspend the substantive negotiation of related transactions before performing the statutory declaration procedures," Cui advised.