China’s Authorities Ups Management of ByteDance With Stake and Board Seat in Key Subsidiary

The Chinese government on Tuesday acquired a stake and one of three board seats in a key subsidiary of TikTok owner ByteDance, reinvigorating the debate over whether the popular short video app poses a threat to national security.

Chinese authorities now own a 1% stake in Beijing ByteDance Company, a company that holds key licenses to operate the Chinese platforms Douyin, the nationwide version of TikTok and the popular news app Toutiao. The move took place on April 30th earlier this year, according to company information available through the Tianyancha Company Data app.

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The stake was acquired by WangTouZhongWen (Beijing) Technology, which is owned by three Chinese government agencies, including a fund backed by the Cyberspace Administration of China (CAC), the country’s leading internet censor, according to Reuters.

However, the deal doesn’t suggest WangTouZhongWen is directly involved in TikTok, and so doesn’t appear to have a direct impact on the Cayman Islands-based app or ByteDance, the outlet said, citing someone with knowledge of the Object.

Nonetheless, the move comes amid Beijing’s broader campaign to exercise more control over its tech giants and curb their influence through antitrust investigations and tightened regulations.

Paul Haswell, a Hong Kong-based partner with Pinsent Masons law firm, told Reuters that the deal “should be construed as a move by the Chinese government to stay in control.” [tech firms] and take control. “He expected to see more deals like this, which, if ramped up, could turn private tech firms into state-owned enterprise-like companies that are overseen by the government.

The news prompted Florida Senator Marco Rubio to call on the Biden government to “take immediate action” to ban TikTok and WeChat because they pose a threat to US privacy and security.

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“Beijing’s aggressiveness makes it clear that the regime sees TikTok as an extension of the party state and that the US must treat it that way,” he said in a statement.

Douyin isn’t the only major Chinese social platform Beijing is involved in. It also holds a 1% stake in a subsidiary of the Weibo social media platform and can appoint a board member there. This stake is owned by the China Internet Investment Fund (CIIF), which is also supported by the CAC. The CIIF has already invested in the short video platform and the Douyin rival Kuaishou Technology and the podcast platform Ximalaya.

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