Chinese Communists Tighten Grip on TikTok Parent Bytedance

According to recent reports, the Chinese communist government has gained a board seat in a key entity of TikTok parent company Bytedance which has raised doubts around the independence of the company and the influence wielded over it by Beijing.

Reuters reports that the Chinese government has taken a one-percent stake in Beijing ByteDance Technology, which is an important entity for ByteDance as it controls some of the licenses for China’s version of TikTok, Douyin. Other licenses controlled by the entity include a news aggregator called Toutiao.

The flag of China flies behind a security camera over the Chinese Consulate in San Francisco, Thursday, July 23, 2020. The Chinese consulate in San Francisco is harboring a Chinese researcher who the FBI says lied about her military background. (AP Photo/Jeff Chiu)

The stake is held by WangTouZhongWen (Beijing) Technology which is under the control of three Chinese state entities. According to government shareholder data, the owners include a fund backed by the Cyberspace Administration of China (CAC), which essentially acts as china’s internet watchdog.

Reuters spoke to a source with knowledge of the matter who clarified that the holding in the ByteDance subsidiary does not indicate a direct stake in TikTok or ByteDance as a company overall. Paul Haswell, a Hong Kong-based partner at the law firm Pinsent Masons, commented on the situation stating:

I think this all arises out of a concern within the Chinese government that private technology companies were gaining too much data and too much power, and so should be construed as a move by the Chinese government to rein them in and take control.

This practice is likely to continue, with the government taking greater stakes and exerting more control, essentially turning many of these tech companies into SOE (state enterprise)-lite type entities.

A representative for ByteDance said that Beijing ByteDance Technology “only relates to some of ByteDance’s China-market video and information platforms, and holds some of the licenses they require to operate under local law.” ByteDance is not the only tech firm that the Chinese government has invested in, the government holds a similar one-percent stake in a key entity of the Chinese social media platform Weibo.

TikTok is facing a massive lawsuit in the UK related to collecting the private data of children. According to former children’s commissioner for England Anne Longfield: “TikTok is a hugely popular social media platform that has helped children keep in touch with their friends during an incredibly difficult year. However, behind the fun songs, dance challenges and lip-sync trends lies something far more sinister,” Longfield alleges that the firm is “a data collection service that is thinly veiled as a social network” which has “deliberately and successfully deceived parents.”

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