TikTok owner ByteDance begins to shift operations outside of China

TikTok poaching of Disney’s Kevin Mayer to be its CEO was just the most visible part of a broader strategy by its Chinese owner to move its power center away from China at a time of mounting global tensions, several familiar people said. with the plans.

The parent company of the short video app, ByteDance, has quietly made a series of moves in recent months to transfer global decision-making and research capabilities outside its home country, sources told Reuters.

The strategy is aimed not only at TikTok, which is not available in China, but at all businesses that are not focused on China, the sources said. Such businesses also include units in India such as the Helo social media application.

ByteDance has expanded TikTok’s engineering, research and development operations in Mountain View, California, according to three sources. One of the people said he had hired more than 150 engineers there.

ByteDance also hired a New York-based director of investor relations to keep in touch with major investors, including General Atlantic and KKR, relationships that were previously managed through Beijing, according to two sources.

The new hire, Michelle Huang, is a former SoftBank investor who worked on the Japanese firm’s investment in ByteDance. Huang did not immediately respond to an email request for comment.

The changes take place at a time of increased tension between the US. USA And China on trade, technology and the COVID-19 pandemic, as well as intense US regulatory scrutiny of TikTok, which has quickly gained popularity around the world and considers the US USA Its biggest market.

Previously, Walt Disney’s chief broadcast officer Mayer, who was doubly appointed chief operating officer of Los Angeles-based ByteDance, will also receive leadership for areas such as global corporate development. Many of his responsibilities were previously managed outside of Beijing, according to three sources.

More broadly, ByteDance is also recruiting engineers worldwide, including in Singapore, Jakarta and Warsaw, online job vacancies show.

These major organizational changes are greeted with caution by ByteDance staff who support the company’s global operations from China, three sources told Reuters. They are concerned that they may become less relevant in the next phase of expansion and have started looking for work elsewhere, the sources said.

For TikTok, the rapid expansion of the US engineering team. USA It’s part of efforts to migrate its technical resources to the West from China, where most of the work on the app has been done so far, according to two sources familiar with the company’s plans. It is not uncommon for multinational technology companies like Google to have engineers in China.

Although the app’s engineering team previously informed managers in China, TikTok is in the process of recruiting a senior executive to head the US engineering department. USA, According to two sources. It has reached out to a senior Google employee in recent months, a source said.

However, breaking ties with the China-based team will be difficult.

Some of the engineers in China support TikTok, as well as ByteDance’s Chinese social media app Douyin, the three sources said. Completely separating development would be next to impossible as both apps share some infrastructure, two of the sources said.

TikTok, which allows users to create short videos with special effects, has become popular with American teens doing viral challenges that combine dancing with music clips from the app’s library.

However, its Chinese property has caused concern in Washington about TikTok’s handling of personal data. The company uses sophisticated artificial intelligence to make video recommendations based on user behavior in the app.

In addition to hiring 150 employees, the Mountain View team has hunted a dozen data engineers from US tech giants. USA To manage the security of user data, a source said.

Since last year, TikTok has faced scrutiny from US authorities over possible national security risks. An investigation by the United States Treasury Foreign Investment Committee in the United States focuses on the handling of personal data, Reuters reported in November.

Legal experts said regulators would study TikTok’s latest actions to determine if they mitigated any potential risks and were more than cosmetic touches.

“With any attempt at restructuring, the problem is one of credibility,” said Paul Marquardt, CFIUS attorney at the law firm Cleary Gottlieb, who is not involved in the TikTok review.

“CFIUS would assess whether it truly believed that operations were functionally independent and isolated from potentially hostile influence.”

Republican Senator Marco Rubio was one of the U.S. lawmakers who last year urged CFIUS to review ByteDance’s 2018 acquisition of Musical.ly, a popular music video app in the United States.

When asked whether recent TikTok measures could calm the regulatory concerns of the United States, he told Reuters: “As long as TikTok or any other application operates in a way that influences the Chinese government and the Communist Party, it is impossible to separate the dangers of using such a reality app that user information could be at risk. “