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Home / Business / Exclusive: U.S. pushes Chinese owner of Grindr to divest the dating app – sources

Exclusive: U.S. pushes Chinese owner of Grindr to divest the dating app – sources



(Reuters) – Chinese gaming company Beijing Kunlun Tech Co Ltd is looking to sell Grindr LLC, the popular gay dating app since 2016, after a Government national security panel raises concerns about its ownership.

FILE PHOTO: An unidentified man using a smart phone walks through London's Canary Wharf in London, UK, September 28, 2018. REUTERS / Russell Boyce / File Photo

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

CFIUS 'specific concerns and any attempt to mitigate them could not be learned. The United States has been increasingly scrutinizing app developers about the safety of personal data. military or intelligence personnel.

Kunlun said last August he was preparing for an initial public offering (IPO) of Grindr. 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 acquiring CFIUS review, according to the sources, making it vulnerable to such an intervention.

The matter is not confidential.

Kunlun 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 on individual cases.

Grindr, which describes itself as the world's largest social networking app for gay, bisexual, transgender and queer 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 blocks 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 reveal the reasons it chooses to block a deal with the company involved. 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 thus 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 U.S. Pat. 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 US government employees seek employment as a law enforcement officer, 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 asking with respect to how the app would protect users' privacy under its Chinese owner.

Kunlun is one of China's largest mobile gaming companies. 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.

Reporting by Carl O'Donnell, Liana B. Baker and Echo Wang in New York; Editing by Greg Roumeliotis and Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

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