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Exclusive: China’s ByteDance moves to ringfence the TikTok app, in the midst of a U.S. probe – sources

NEW YORK/WASHINGTON/BEIJING (Reuters) – ByteDance has stepped up efforts to separate the social media and app TikTok of many of its Chinese operations, in the midst of a U.S. national security panel’s investigation of the safety and security of the personal data to be processed, people familiar with the matter said.

The Chinese technology business, is looking to the guarantors, to the Committee on Foreign Investment in the United States and exhorting cfius) that the personal data provided by the TikTok, which is very popular among AMERICAN teens, as it is stored in a secure manner in the United States, and will not be compromised by the Chinese authorities, the sources said.

Exhorting cfius, which reviews deals by foreign investors for their potential national security risks, is currently looking for ByteDance’s $ 1 billion acquisition of the social media app to Show.m in 2017, which laid the foundation for the TikTok’s rapid growth, Reuters reported earlier this month.

ByteDance response represents a key test of corporate China’s ability to operate the businesses in the United States of america for the processing of your personal data, such as the U.S. President and Donald Trump’s trade war with China, the fans of mistrust between the world’s two largest economies.

ByteDance hoping to avoid the fate of a Chinese gaming company Beijing Kunlun Tech Co., Ltd. (300418.SS), which said in May it would go on to exhorting cfius a request to transfer one of the most popular gay dating app Grindr following concerns about the safety and security of your personal information. It is also the exploration of the exit from its investment in Grindr, by means of an initial public offering.

ByteDance started to separate the TikTok is operational, before exhorting cfius contacted in October, and because it wanted its staff to concentrate on the TikTok, according to the sources.

With the completion of the separation, the TikTok’s product and business development, marketing, and legal teams on the Chinese social media app Douyin in the third quarter of this year, according to the sources, who, for anonymity to discuss the internal rules and regulations.

During the summer, it also hired an external consultant to carry out checks on the integrity of the personal information that has been stored, the sources added. The company has said that the US data of the user is stored entirely in the United States of america, with a back-up center in Singapore. It has also been said that the Chinese government does not have jurisdiction over the TikTok and content.

Following the approach of exhorting cfius, TikTok, is making a new push to set up a team in Mountain View, Calif., who will oversee the data management, according to sources. The team will determine whether or not the Chinese engineers are required to have access to the TikTok, the database, and the monitoring of the activity, the sources said.

FILE PHOTO: The logo of the TikTok app on a mobile phone in this photo illustration February 21, 2019. The photo was taken on February 21, 2019. REUTERS/Danish Siddiqui/Illustration

TikTok, it is also the to hiring more AMERICAN engineers to reduce the dependence of workers in China, according to sources.

It is not clear how effective these changes will be made in the soothe of exhorting cfius. A spokeswoman for the U.s. Treasury Department, which chairs, exhorting cfius, he said that it was not a comment on any of the information is related to a specific exhorting cfius cases.

“The move to a company in China, the geographic and technical skills give you exhorting cfius to more comfort that the company is truly independent of the Chinese owner of the Chinese government,” said Nevena Simidjiyska, is a partner in the law firm of Fox Rothschild llp, who advises companies on exhorting cfius reviews and has not been involved in the TikTok case.

IN THE U.S., CONCERNS

TikTok and employs about 400 people in the United States, up from 20 people at the time of the show.m the acquisition, the sources said. The majority of the new employees came out this year, as the TikTok and built-in in the V. S., the sources added. ByteDance has 50,000 employees all over the world.

U.S. lawmakers called last month for a national security investigation, to TikTok, the expression of concern that the Chinese company may be censoring politically sensitive content, and to raise questions about how it stores your personal data. In the last week of the U.S. armed forces, the Secretary, and Ryan McCarthy also said the U.S. military has been engaged in a review of the safety and security of the TikTok.

Facebook Inc’s (FB.O) CEO Mark Zuckerberg, the social media platform to compete with the TikTok for the younger users, has also been criticism of the app on censorship is concerned.

Exhorting cfius probe is currently focusing on the processing of personal data, rather than censorship, according to two sources. ByteDance a view to exhorting cfius investigation, or informal, and is not subject to a formal evaluation, which is one of the sources added.

Some of the information that TikTok shops, such as the person’s name, age, address, email address, and telephone number, shall be submitted by the end-users. Any other information in connection with a person, a location, and can be automatically collected, in accordance with the TikTok website. TikTok includes a user-generated content (ugc), like photos and videos.

FILE PHOTO: TikTok logo will be displayed on your smartphone while on the AMERICAN flag in this illustration picture taken November 8, 2019. REUTERS/dado Ruvic

Launched just two years ago, TikTok has been downloaded 1.5 billion times, which makes it the third-most-downloaded non-game app of the year, following Facebook’s WhatsApp and Messenger apps, according to research firm SensorTower.

ByteDance, is one of China’s fastest-growing start-ups. The owner of the land, the leading news aggregator, Jinri Toutiao, as well as the TikTok, which has attracted celebrities such as Ariana Grande and Katy Perry.

ByteDance has the Japanese technology giant SoftBank Group Corp. (a) (9434.(T), a venture capital firm, Sequoia Capital, and private equity firms such as KKR & Co., Inc. (“PROGRESS.(N) to General Atlantic and Hillhouse Capital Group as investors.

Reporting by Echo Wang in New York, New York, Alexandra Alper in Washington, dc and Yingzhi Yang in Beijing; Editing by Greg Roumeliotis and Lisa Shumaker

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