TikTok Considers Changes to Distance App From Chinese Roots

By Liza Lin and Shan Li 

ByteDance Ltd is considering changing the corporate structure of its popular short-video app TikTok, as it comes under increasing scrutiny in its biggest markets over its Chinese ties.

Senior executives are discussing options such as creating a new management board for TikTok or establishing a new headquarters for the app outside of China to distance the app's operations from China, said a person familiar with the company's thinking.

TIkTok, which has shot to global fame over the last two years thanks to its catchy dancing and lip syncing videos, is owned by Beijing-based ByteDance, one of the world's most valuable technology startups. ByteDance, whose secondary shares have valued the firm at $150 billion in recent weeks, counts big-name U.S. investors such as Coatue Management and Sequoia Capital among its backers.

The app has seen a surge in downloads as the coronavirus kept millions of people locked up in their homes and eager for distractions. About 315 million users downloaded TikTok in the first quarter of the year, the most downloads ever for an app in a single quarter, according to research firm Sensor Tower, bringing its total to more than 2.2 billion world-wide.

But as TikTok grows in popularity -- and an increasingly assertive Chinese government raises hackles in foreign capitals -- regulatory pressure on the app is intensifying.

Officials in several countries have expressed concerns with the large volumes of user data TikTok collects, with some speculating that ByteDance could be compelled to share it with the Chinese government. Tiktok has repeatedly denied receiving Chinese government requests for user data and said it wouldn't respond if asked.

The U.S. State and Defense departments already prohibit employees from downloading TikTok on government devices. On Tuesday, Secretary of State Mike Pompeo hinted at a possible ban for TikTok and other Chinese apps during an interview with Fox News.

In Australia, the chair of a legislative committee looking into foreign interference through social media named TikTok among the platforms that might be called to appear.

"What's needed is a really clear understanding from the platforms about their approach to privacy and their approach to content moderation. That's one of the objectives of this inquiry," Jenny McAllister, the chairwoman of the committee, told an Australian radio station on Monday.

ByteDance's discussions about changing how TikTok is run are still in their early stages, but setting up an independent TikTok management board would allow a degree of autonomy from the parent company, the person familiar with the firm's thinking said. This person was not aware of any discussions around a corporate spinoff.

TikTok had also been mulling opening a new global headquarters as early as December, the Wall Street Journal reported at the time. Singapore, London, Dublin were considered as possible locations. Recent events accelerated such plans, the person said.

TikTok currently doesn't have a global headquarters. Recently installed Chief Executive Officer Kevin Mayer is based in Los Angeles, Calif.

(END) Dow Jones Newswires

July 09, 2020 09:33 ET (13:33 GMT)

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