Told U.S. security at risk, Chinese firm seeks to sell Grindr dating app

[timosman]

https://www.reuters.com/article/us-grindr-m-a-exclusive/exclusive-us-pushes-chinese-owner-of-grindr-to-divest-the-dating-app-sources-idUSKCN1R809L


MARCH 26, 2019

Chinese gaming company Beijing Kunlun Tech Co Ltd is seeking to sell Grindr LLC, the popular gay dating app it has owned since 2016, after a U.S. government national security panel raised concerns about its ownership, according to people familiar with the matter.


https://www.youtube.com/watch?v=9lJxEfsOW70

The Committee on Foreign Investment in the United States (CFIUS) has informed Kunlun that its ownership of West Hollywood, California-based Grindr constitutes a national security risk, the two sources said.

CFIUS’ specific concerns and whether any attempt was made to mitigate them could not be learned. The United States has been increasingly scrutinizing app developers over the safety of personal data they handle, especially if some of it involves U.S. military or intelligence personnel.

Kunlun had said last August it was preparing for an initial public offering (IPO) of Grindr. As a result of CFIUS’ intervention, Kunlun has now shifted its focus to an auction process to sell Grindr outright, given that the IPO would have kept Grindr under Kunlun’s control for a longer period of time, the sources said.

Grindr has hired investment bank Cowen Inc to handle the sale process, and is soliciting acquisition interest from U.S. investment firms, as well as Grindr’s competitors, according to the sources.

The development represents a rare, high-profile example of CFIUS undoing an acquisition that has already been completed. Kunlun took over Grindr through two separate deals between 2016 and 2018 without submitting the acquisition for CFIUS review, according to the sources, making it vulnerable to such an intervention.

The sources asked not to be identified because the matter is confidential.

Kunlun representatives did not respond to requests for comment. Grindr and Cowen declined to comment. A spokesman for the U.S. Department of the Treasury, which chairs CFIUS, said the panel does not comment publicly on individual cases.

Grindr, which describes itself as the world’s largest social networking app for gay, bisexual, transgender and ***** people, had 27 million users as of 2017. The company collects personal information submitted by its users, including a person’s location, messages, and in some cases even someone’s HIV status, according to its privacy policy.

CFIUS’ intervention in the Grindr deal underscores its focus on the safety of personal data, after it blocked the acquisitions of U.S. money transfer company MoneyGram International Inc and mobile marketing firm AppLovin by Chinese bidders in the last two years.

CFIUS does not always reveal the reasons it chooses to block a deal to the companies involved, as doing so could potentially reveal classified conclusions by U.S. agencies, said Jason Waite, a partner at law firm Alston & Bird LLP focusing on the regulatory aspects of international trade and investment.

“Personal data has emerged as a mainstream concern of CFIUS,” Waite said.

The unraveling of the Grindr deal also highlights the pitfalls facing Chinese acquirers of U.S. companies seeking to bypass the CFIUS review system, which is based mostly on voluntary deal submissions.

Previous examples of the U.S. ordering the divestment of a company after the acquirer did not file for CFIUS review include China National Aero-Technology Import and Export Corporation’s acquisition of Seattle-based aircraft component maker Mamco in 1990, Ralls Corporation’s divestment of four wind farms in Oregon in 2012, and Ironshore Inc’s sale of Wright & Co, a provider of professional liability coverage to U.S. government employees such as law enforcement personnel and national security officials, to Starr Companies in 2016.

PRIVACY CONCERNS
Kunlun acquired a majority stake in Grindr in 2016 for $93 million. It bought out the remainder of the company in 2018.

Grindr’s founder and chief executive officer, Joel Simkhai, stepped down in 2018 after Kunlun bought the remaining stake in the company.

Kunlun’s control of Grindr has fueled concerns among privacy advocates in the United States. U.S. senators Edward Markey and Richard Blumenthal sent a letter to Grindr last year demanding answers with regards to how the app would protect users’ privacy under its Chinese owner.

“CFIUS made the right decision in unwinding Grindr’s acquisition. It should continue to draw a line in the sand for future foreign acquisition of sensitive personal data,” Markey and Blumenthal said in a statement on Wednesday.

Kunlun is one of China’s largest mobile gaming companies. It was part of a buyout consortium that acquired Norwegian internet browser business Opera Ltd for $600 million in 2016.

Founded in 2008 by Tsinghua University graduate Zhou Yahui, Kunlun also owns Qudian Inc, a Chinese consumer credit provider, and Xianlai Huyu, a Chinese mobile gaming company.

[spudea]

"Networking app"..... AHAHAHAHAHA

[UWDude]

Talk about a blackmail machine owned by China.

I wonder if the Chinese Government forced Beijing Kunlun Tech Co Ltd, full and free access to their servers and private messages.
(I lied, I don't wonder, at all).

[angelatc]

Talk about a blackmail machine owned by China.

).

That's exactly what I was thinking.

[UWDude]

Jesus Christ, the more I think about this, the more I realize at least 8% of the US armed Forces are compromised.
Shit China is selling this shit to allies who want it. I was going to say "might", but I realized, China is China, and China gonna do China things.
The Chinese government doesn't fuck around with things like "laws" and "privacy", especially not for foreign citizens. Especially not for American citizens. Especially not for American citizens who lie on possible hybrid warfare attack vectors.
I'd bet 1- 2% of all armed forces married men have been on Grinder. That's tens of thousands of weak points.
And AFAIK, every gay guy in the world looking to fuck or for love is on Grinder. And its not like any of them are looking out for some big dick honey trap.

Wow. LoL.

[dannno]

Grindr is a genius concept for gay guys..

You signup and create a profile like tinder, but instead of swiping like or not like on people around you, you just get a list of guys around you with pictures who you can message.. but it is sorted in the order of who is closest. So if you go to the grocery store and open the app, there is a good chance that the first person who pops up might be right there in the store with you.. if you're at a bar or club, there might be several.

That would never work for a male/female dating app, but the gay community loves that shit.

[Danke]

Has HB been compromised to the Chinese?

[UWDude]

Has HB been compromised to the Chinese?

In all reality, all agencies have been compromised.

And its not just gay men afraid of being outed, that fear is mostly nonsense now.
It is gay men who have been cheating on their lovers kind of fear of hiding.
It's married straight men who are "bi-curious".


This is hilarious, actually.
It is explaining so much right now.


XD

What a treasure trove for the Chinese, and Americans just handed them over, with very little thought to the actual internet fingerprint they were creating. The more pictures, the more identification. Even pictures via PM, like faces and shit.

And there is all that child porn too. You want blackmail gold? Find an older gay man diddling an underage man. It is so common in their culture. That is why the push to legalize pedophilia.

Such a major Cock up. pun intended.

[Slave Mentality]

In all reality, all agencies have been compromised.

And its not just gay men afraid of being outed, that fear is mostly nonsense now.
It is gay men who have been cheating on their lovers kind of fear of hiding.
It's married straight men who are "bi-curious".


This is hilarious, actually.
It is explaining so much right now.


XD

What a treasure trove for the Chinese, and Americans just handed them over, with very little thought to the actual internet fingerprint they were creating. The more pictures, the more identification. Even pictures via PM, like faces and shit.

And there is all that child porn too. You want blackmail gold? Find an older gay man diddling an underage man. It is so common in their culture. That is why the push to legalize pedophilia.

Such a major Cock up. pun intended.


That does make a lot of sense...every once in a while the universe deals up some pretty tasty justice.

[Brian4Liberty]

Kunlun’s control of Grindr has fueled concerns among privacy advocates in the United States. U.S. senators Edward Markey and Richard Blumenthal sent a letter to Grindr last year demanding answers with regards to how the app would protect users’ privacy under its Chinese owner.

Perfectly valid concern. Blumenthal, as a US Senator, well knows the security risk involved if his Grindr account information is leaked.

[timosman]

https://www.reuters.com/article/us-usa-china-grindr-exclusive/exclusive-behind-grindrs-doomed-hookup-in-china-a-data-misstep-and-scramble-to-make-up-idUSKCN1SS10H


MAY 22, 2019

Early last year, Grindr LLC’s Chinese owner gave some Beijing-based engineers access to personal information of millions of Americans such as private messages and HIV status, according to eight former employees, prompting U.S. officials to ask it to sell the dating app for the gay community.

After taking full control of Grindr in January 2018, Beijing Kunlun Tech Co Ltd stepped up management changes and consolidated operations to cut costs and expand operations in Asia, one former employee familiar with the decision said.

In the process, some of the company’s engineers in Beijing got access to the Grindr database for several months, eight former employees said.

While it is known that data privacy concerns prompted the crackdown on Kunlun, interviews with over a dozen sources with knowledge of Grindr’s operations, including the former employees, for the first time shed light on what the company actually did to draw U.S. ire and how it then tried to save its deal.

Reuters found no evidence that the app’s database was misused. Nevertheless, the decision to give its engineers in Beijing access to Grindr’s database proved to be a misstep for Kunlun, one of the largest Chinese mobile gaming companies.

In early 2018, the Committee on Foreign Investment in the United States (CFIUS), a government panel that scrutinizes foreign acquisitions of U.S. companies, started looking into the Grindr deal to see whether it raised any national security risks, one source close to the company said.

Last September, it ordered Kunlun to restrict access of its Beijing-based engineers to Grindr’s database, the source said.

Kunlun did not respond to requests for comment. A Treasury spokesman declined to comment on behalf of CFIUS.

A Grindr spokeswoman said “the privacy and security of our users’ personal data is and always will be a top priority.”

DATA PRIVACY FOCUS
Two former national security officials said the acquisition heightened U.S. fears about the potential of data misuse at a time of tense China-U.S. relations. CFIUS has increased its focus on safety of personal data. In the last two years, it blocked Chinese companies from buying money transfer company MoneyGram International Inc and mobile marketing firm AppLovin.

Based in West Hollywood, California, Grindr is especially popular among gay men and has about 4.5 million daily active users. CFIUS likely worried that Grindr’s database may include compromising information about personnel who work in areas such as military or intelligence and that it could end up in the hands of the Chinese government, the former officials said.

“CFIUS operates under the assumption that, whether through legal or political means, Chinese intelligence agencies could readily access information held by private Chinese companies if they wanted to,” said Rod Hunter, an attorney at Baker & McKenzie LLP who managed CFIUS reviews during President George W. Bush’s administration.

In a faxed statement to Reuters, China’s foreign ministry said it was aware of the situation with Grindr and urged the United States to allow fair competition and not politicize economic issues.

“The Chinese government always encourages Chinese companies to conduct economic and trade cooperation overseas in accordance with international rules and local laws,” it said.

GRINDR’S TAKEOVER
Kunlun first acquired 60% of Grindr in 2016 for $93 million, amid a wave of acquisitions of U.S. technology companies by Chinese firms. At the time CFIUS focused on traditional national security concerns, such as the use of technology for potential military applications, the former U.S. security officials said.

Submissions of deals to CFIUS for review were entirely voluntary then, and Kunlun did not think it needed to submit its purchase of Grindr because it was convinced the deal posed no national security risk, two sources close to the company said.

After that deal was completed Kunlun tasked engineers in Beijing to improve the app, former employees said. The team worked out of the second floor of Ming Yang International Center, Kunlun’s 11-story headquarters east of the Palace Museum in Beijing, one former employee said.

At first, they did not have access to Grindr’s database, six former employees said. But that changed when Kunlun bought out the remainder of Grindr for $152 million, and the dating app’s founder and CEO, Joel Simkhai, left.

Kunlun shifted a significant portion of Grindr’s operations to Beijing, seven former employees said. Some outside contractors ended their work, and most of Grindr’s U.S. engineers were subsequently let go or resigned, they said.

Some U.S. employees who learned that the database access had been given to colleagues in China raised concerns about privacy with management, but they were told that they should not worry, two former employees said.

CFIUS ORDER
About a month after CFIUS’ September order, Kunlun told the panel the Beijing team’s access to Grindr’s database had been restricted, the source close to the company said.

Grindr also hired a cyber forensic firm and a third-party auditor at CFIUS’s behest to report on its compliance and to make sure the data was secure, the source said.

Kunlun started to operationally separate Grindr as well, making Grindr Beijing a different legal entity, transferring some Chinese employees from Kunlun to Grindr, and finding separate office space for Grindr in Beijing, former employees said.

Reuters could not determine what triggered CFIUS’ initial concerns about the Grindr deal, or whether Kunlun’s steps were directly aimed at allaying the panel’s fears.

By February, Kunlun had decided to shut down Grindr’s Beijing office, parting ways with some of the roughly two dozen employees there, two former employees said.

It told them the decision was taken because of policy reasons and concerns about data privacy, they said.

In March, Reuters first reported that CFIUS had asked Kunlun to divest Grindr.

Behind the scenes, the source close to the company said, Kunlun kept trying to salvage the Grindr deal until as recently as last week, when it said it would sell it by June next year.