The Chinese owner of TikTok and the prohibition bill

This week, the U.S. House of Representatives easily passed a bill giving TikTok's Chinese owner ByteDance six months to sell its U.S. assets or face a ban, the biggest threat to the app since the Trump administration. Chinese firm valued at $268 billion in December is described below.

Software engineer Zhang Yiming started ByteDance in 2012 in Beijing, known as the "App Factory" for its regular mobile app launches. It is considered the world's leading algorithm firm since its flagship apps like TikTok, Douyin, and Toutiao use powerful recommendation engines to attract users.

Toutiao, a 2012 news aggregation software that uses machine learning to tailor content, was its first hit. Douyin, TikTok's Chinese sibling app released in late 2016, became ByteDance's second app with over 100 million users in under a year. TikTok, ByteDance's international Douyin, premiered the next year. ByteDance said the two apps were positioned as separate products from the start, yet they share a brand and UI.

Zhang, from Fujian, studied software engineering at Nankai University in Tianjin. Before launching ByteDance, he worked at several software companies, including Microsoft briefly. ByteDance's early years were spent in Beijing working on Toutiao and Douyin, but since the COVID-19 pandemic, he has spent more time abroad, with Singapore being a crucial base, according to sources. They preferred anonymity because they were not permitted to speak to media.

Zhang resigned as ByteDance CEO in 2021 and was succeeded by co-founder and university roommate Liang Rubo. He claimed he lacked the social skills to be a good manager and preferred to think about corporate strategy away from the spotlight.

Last May, TikTok reported that 60% of ByteDance is "beneficially owned by global institutional investors such as Carlyle Group, General Atlantic, and Susquehanna International Group," 20% by employees, and the rest by Zhang. Sources say Zhang still controls over 50% of ByteDance's voting rights.

According to official media, China's ruling Communist Party established a party chapter at ByteDance in 2014, increasing concerns about Beijing's influence. After the Chinese government bought a 1% investment in Beijing ByteDance Technology in 2019, it gained a board seat at the subsidiary, increasing scrutiny.

In 2020, the Trump administration issued executive orders requiring ByteDance to sell TikTok's U.S. assets or face bans. Federal courts blocked orders. Beijing, which protested Trump's executive order, amended a list of technologies requiring Chinese government clearance before sale. Experts believed TikTok's recommendation algorithm would be included.

U.S. officials have criticized TikTok's security and privacy, implying Beijing may access user data. TikTok, used by 170 million Americans, says it has never shared or been asked to share U.S. user data with China.

TikTok partnered with Oracle (ORCL.N) to hold American user data in their cloud infrastructure starting in 2020, addressing concerns. TikTok opposes the new bill. This week, CEO Shou Zi Chew stated the company would fight a ban legally.


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