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China prefers TikTok U.S. shutdown to forced sale: RTR

Yahoo Finance's Dan Howley joins Kristin Myers to break down the latest on TikTok, as Reuters reports China is against a forced sale of the video app and would rather see operations shut down in the U.S.

Video Transcript

KRISTIN MYERS: Well, let's talk TikTok now. China would actually prefer that TikTok US just shut down instead of being forced into a sale. And so for more on this, we're joined now by our favorite techxpert, Dan Howley. Hey, Dan.

DAN HOWLEY: Hey, Kristin. That's right. Apparently, that's how China is really describing this battle between it and the US over the fate of TikTok. Essentially, what had happened was President Trump had signed an executive order, basically saying that TikTok had to cease operations in the US by a deadline that he says was September 15, but there's been kind of conflicting reports if it's really September 20.

But either way, they've been trying to sell themselves to either the likes of Microsoft and Walmart, which are frontrunners, or Oracle and a collection of some VC firms. And really, it seemed like Microsoft was going to be the frontrunner here, because they have the backing, the cloud infrastructure, and the technical know-how. And Walmart can add the e-commerce element to that that would make it a real solid winner.

But I think one of the big issues going forward now is, obviously, the fact that China instated restrictions on the export of certain AI capabilities. So that basically takes out the special sauce for TikTok, which is its algorithm. The algorithm that recommends new TikTok videos and you TikTok users to individuals is what keeps people stuck in the app. It's the stickiest part of it.

So that wouldn't be allowed to come over. Or there would have to be some kind of negotiation. But it seems like now, though, China is basically saying, look, we don't want this to fly. Trump isn't budging on the date, so really, TikTok's fate in the US is now very much up in the air.