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TikTok: Technology Overview and Issues Powers Act. The ruling does not affect the November 12, 2020, deadline that ByteDance divest from TikTok in the United States.29 China’s Cybersecurity Law and Export Rules The Cybersecurity Law of the People’s Republic of China was passed in November 2016 and went into effect in June 2017. It was updated in November 2018 by the Regulations on Internet Security Supervision and Inspection by Public Security Organs. These laws— strictly control online activities; mandate the local storage of user data and the registration of certain network assets; and allow the government to conduct onsite and remote inspection of computer networks.30 The law requires Chinese companies to cooperate with government intelligence operations if so requested31 and may allow the Chinese government access to user data collected by any company doing business in China. One analyst notes that “by demanding access to any data collected and stored in China, the updated regulations force [domestic and] foreign companies based in China to comply with its investigative measures, leaving intellectual property and private information vulnerable to government abuse.”32 On August 31, 2020, China took specific action that could prohibit the sale of TikTok’s underlying technology and processes. The new export regulations cover such technologies as “text analysis, content recommendation, speech modeling, and voice recognition.”33 Since the For You feed and algorithmic recommendation engine is considered the key element of TikTok’s success, a ban on transferring the technology and processes used to create it could make it more difficult to sell the app or prevent a sale altogether.34 Status of Potential Oracle and Walmart Partnership with TikTok In response to the TikTok Executive Order, two leading bidders emerged as potential buyers of the app: Oracle and a partnership between Microsoft and Walmart. Bids were reported to be in the 29 Rachel Lerman, “Judge Suggests Trump Administration Overreached in TikTok Case,” Washington Post, September 28, 2020, https://www.washingtonpost.com/technology/2020/09/28/tiktok-injunction-court-decision/. 30 Generally defined in the Cybersecurity Law as five or more computers connected to the internet, which account for almost every foreign company operating in China. 31 “What’s Going on with TikTok, China, and the US Government?” 32 Lauren Maranto, “Who Benefits from China’s Cybersecurity Laws?” Center for Strategic and International Studies, June 25, 2020, at https://www.csis.org/blogs/new-perspectives-asia/who-benefits-chinas-cybersecurity-laws. 33 Timothy B. Lee, “China Announces New Export Rules That Could Prevent Sale of Tiktok,” ArsTechnica.com, August 31, 2020, at https://arstechnica.com/tech-policy/2020/08/china-announces-new-export-rules-that-could-prevent- sale-of-tiktok/. (Hereinafter, “China Announces New Export Rules That Could Prevent Sale of Tiktok.”) 34 “China Announces New Export Rules That Could Prevent Sale of Tiktok.” Congressional Research Service 6PDF Image | TikTok: Technology Overview and Issues Updated October 21, 2020 Congressional Research Service
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