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China tech

Besieged app TikTok hires lobbyists

Parent ByteDance weighs ways to look less Chinese

TikTok has been downloaded 1.5 billion times. Third-quarter downloads fell 4% on the year to 177 million even as TikTok rose to the second-most-downloaded app from No. 4, data from U.S. research firm Sensor Tower shows.   © Reuters

NEW YORK -- Another day, another swipe by Washington at TikTok, and the short-video app's Chinese owner ByteDance has turned to lobbying as it braces for the Grindr treatment.

Citing TikTok by name, Republican Sen. Josh Hawley introduced Monday a bill to prohibit technology companies with ties to China from transferring U.S. user data to the Asian country.

"If your child uses TikTok, there's a chance the Chinese Communist Party knows where they are, what they look like, what their voices sound like, and what they're watching," Hawley said in a news release, echoing remarks from a congressional hearing he chaired earlier this month. "That's a feature TikTok doesn't advertise."

Data collected by TikTok on U.S. users includes profile information, location and user-generated content, as well as "behavioral information," which it uses to customize content and ads. The app also has access to users' phone books with their permission.

TikTok has said it stores all of its U.S. user data in-country. The American operation does not fall under Chinese jurisdiction and is not influenced by any foreign government, a spokesperson said last month after the company was accused of censoring content in line with Beijing's directives.

Last month, ByteDance disclosed for the first time significant spending on lobbying -- $120,000 for the third quarter of 2019 -- amid an avalanche of American scrutiny of TikTok in recent weeks.

TikTok is also looking at ways to distance itself from China, such as expanding operations in Southeast Asia and rebranding, The Wall Street Journal reported. Beijing-based parent ByteDance is the world's most valuable startup, at $75 billion, and Japan's SoftBank Group holds a stake.

Senate Minority Leader Chuck Schumer and Republican Sen. Tom Cotton a few weeks ago called on intelligence officials to assess "the national security risks posed by TikTok and other China-based content platforms operating in the U.S."

A more substantial threat comes from the Committee on Foreign Investment in the United States, which is reportedly reviewing whether ByteDance's roughly $1 billion purchase of TikTok predecessor Musical.ly in 2017 constitutes a national security risk.

While CFIUS does not disclose information about ongoing investigations, its treatment of Grindr, the Los Angeles-based gay dating app owned by Beijing Kunlun Tech, offers hints to what might be asked of ByteDance if a probe did find a security threat in its ownership of TikTok.

Per a May agreement with CFIUS, Kunlun would cease all Grindr operations in China and transfer of sensitive data to the country, a regulatory filing by the Chinese company revealed. Grindr's board would consist of three CFIUS-approved individuals, including two U.S. citizens, one of whom should possess secret-level security clearance.

CFIUS at one point ordered the Chinese company to divest its stake in Grindr completely by June 2020 but has now greenlit a proposed initial public offering of the dating platform, which would allow Kunlun to retain some equity.

TikTok differs from Grindr in that user data it has amassed could be considered less sensitive than that of the gay dating app, such as sexual orientation and HIV status, which some argue could be used to blackmail U.S. military, government and intelligence personnel.

TikTok could also run into data trouble in another key market, India, which accounts for a third of the app's downloads.

The Personal Data Protection Bill introduced by legislators there last year will be picked up in the current parliamentary session, local media report.

While a final version is not publicly available, an earlier draft suggests that the legislation would also require tech companies to store user data in India and sharply restrict the transfer of sensitive personal data out of Indian borders.

ByteDance founder and CEO Zhang Yiming recently said in an internal memo that TikTok should increase investment in weaker markets and continue to diversify its growth, Reuters reported.

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