(Reuters) – at the Beginning of last year, Grindr LLC Chinese owner gave the Beijing-based engineers access to personal information of millions of Americans, such as private messages and the HIV status, according to eight former employees, in which the AMERICAN government for the sale of the dating app for the gay community.
The Grindr logo is displayed on the “HIV Data” text in this image, the image 20 May 2019. REUTERS/dado Ruvic/Illustration
After taking full control of Grindr in January 2018, Beijing Kunlun Tech Co Ltd increased changes in the management and consolidated operations to cut costs and expand operations in Asia, a former employee familiar with the decision said.
In the process, some of the company’s engineers in Beijing gained access to the Grindr database for multiple months, eight former employees said.
While it is known that the data of the personal privacy prompted the precipitation of the Kunlun, interviews with more than a dozen sources with knowledge of Grindr the activities, including the former employees, for the first time shed light on what the company actually did in order to draw AMERICAN ire and how it then tried to save the deal.
Reuters found no evidence that the app’s database was misused. Nevertheless, the decision to give engineers in Beijing have access to Grindr, the database proved to be a misstep for the Kunlun, one of the largest Chinese mobile gaming companies.
In the beginning of 2018, the Committee on Foreign Investment in the United States (exhorting cfius), a government panel that scrutinizes foreign acquisitions of AMERICAN companies, and sought in the Grindr to see if the increased national security risks, a source close to the company said.
In September last year, it ordered Kunlun to limit the access of the Beijing-based engineers Grindr’s database, the source said.
Kunlun did not respond to requests for comment. A Treasury spokesman declined to comment on behalf of exhorting cfius.
A Grindr spokesperson said: “the privacy and security of our users’ personal data is and will always be a top priority.”
DATA PRIVACY FOCUS
Two former national security officials said that the acquisition will strengthen U.S. fears about the possibilities of misuse of data, in a time of strained China-US relations. Exhorting cfius has increased its focus on the security of the personal data. In the last two years blocked Chinese companies from buying a money transfer company MoneyGram International Inc and mobile marketing AppLovin.
Located in West Hollywood, California, Grindr is especially popular among gays, and has about 4.5 million daily active users. Exhorting cfius probably afraid that the Grindr-database, compromising information about the staff, who work in areas such as military or intelligence and that it could end up in the hands of the Chinese government, the former officials said.
“Exhorting cfius operates under the assumption that, whether through legal or political means, Chinese intelligence services could easily have access to the information by the private Chinese companies, if they want,” said Rod Hunter, a lawyer at Baker & McKenzie llp which is managed exhorting cfius reviews during President George W. Bush administration.
In a faxed statement to Reuters, China’s ministry of foreign affairs said it was aware of the situation with Grindr and urged the United States to fair competition and not to politicize economic issues.
“The Chinese government always encourages Chinese enterprises to conduct economic and commercial cooperation overseas, in accordance with the international rules and local legislation,” he said.
GRINDR THE ACQUISITION
Kunlun first acquired 60% of Grindr in 2016 for $93 million, in the midst of a wave of acquisitions of AMERICAN technology companies by Chinese companies. At the time exhorting cfius focused on traditional national security concerns, such as the use of the technology for potential military applications, the former AMERICAN security officials said.
Submissions of offers to exhorting cfius for review were purely on a voluntary basis, and Kunlun was not considered necessary to the purchase of Grindr, because he was convinced that the deal posed no national security risk, two sources close to the company said.
After that deal was completed Kunlun charge of engineers in Beijing and improve the app, former employees said. The team worked from the second floor of Ming Yang International Center, Kunlun’s 11-story headquarters east of the Palace Museum in Beijing, an ex-employee said.
First, they did not have access to Grindr, the database of six former employees said. But that changed when Kunlun bought out the rest of Grindr for $152 million, and the dating app’s founder and CEO, Joel Simkhai, to the left.
Kunlun shifted a significant part of the Grindr’s operations to Beijing, seven former employees said. Some contractors to the end of their work, and the most of Grindr, the AMERICAN engineers were then let go or quit, ” she said.
Some AMERICAN employees, who learned that the access to the database was given to colleagues in China, concerns over privacy with the management, but they were told that they should not worry, two former employees said.
EXHORTING CFIUS ORDER
About a month after exhorting cfius’ September order, Kunlun told the panel and the Beijing team access to Grindr, the database is already limited, the source close to the company said.
Grindr also for the rent of a cyber forensic company and an external auditor exhorting cfius to the command to report on the compliance and make sure that the data was safe, the source said.
Kunlun began operationally separate Grindr, which makes Grindr Beijing other legal entity, the transfer of a number of Chinese workers from the Kunlun to Grindr, and find a separate office space for Grindr in Beijing, former employees said.
Reuters could not determine what the cause of exhorting cfius’ initial concern about the Grindr deal, or Kunlun, the steps were directly aimed at allaying the panel fears.
In February, Kunlun had decided to shut down Grindr Beijing office, parting ways with a number of the approximately two dozen employees, two former employees said.
He told them that the decision was taken because of policy reasons and concerns about the privacy of data, they said.
In March, Reuters first reported that exhorting cfius had asked Kunlun to bump and Grindr.
Behind the scenes, the source close to the company said, Kunlun continued to try to save the Grindr deal until as recently as last week, when it said it would sell by June next year.
Reporting by Echo Wang and Carl O’donnell in New York; Additional reporting by Stella Qiu and Liangping Gao in Beijing ; Editing by Greg Roumeliotis and Paritosh Bansal