The US government says a Chinese gaming company’s ownership of the gay dating app Grindr poses a national security risk, according to a report from Reuters. Beijing Kunlun Tech acquired a 60 percent stake in Grindr in 2016 and bought the rest in 2018. But, Reuters reports, the Chinese firm didn’t clear the acquisition with the agency known as the Committee on Foreign Investment in the United States, or CFIUS, which evaluates the national security impacts of foreign investments in US companies.
Kunlun is now seeking to sell Grindr following the CFIUS assessment, according to Reuters. Grindr declined to comment; CFIUS and Kunlun did not respond to requests for comment.
Reuters didn’t say what specific issues CFIUS raised, but the US government has worried in the past that companies in China could help the Chinese government spy on users. Grindr has access to particularly sensitive user data, including sexual preferences, geolocation, and HIV status. It’s a potential gold mine for blackmailers, but that might not be the agency’s only worry.
Governments are increasingly concerned about how data can be used by adversaries, says Brett Bruen, the former director of global engagement in the Obama administration who now runs the consulting firm Global Situation Room. “Data is the new frontier in espionage and exploitation of weaknesses, whether they be those of individuals or institutions,” he adds. “Any tech company, whether it’s an LGBTQ dating app or a shopping site, is a target-rich environment.” Bruen notes the US and other governments will “take more aggressive steps to protect their citizens and national security.”
Timothy P. O’Toole, a lawyer who handles CFIUS cases at the Washington, DC firm Miller & Chevalier, agrees. He says that although CFIUS forcing companies to unwind a completed deal is unusual, it’s not unheard of. What’s more surprising, O’Toole points out, is that Kunlun apparently didn’t try to clear the deal with CFIUS in advance.
“I think it may be the start of a trend,” he says. “As more high-profile deals come to light, I think we’ll see the committee reaching back to undo deals more often.”
Foreign investments aside, Grindr’s handling of sensitive private data has been a concern. WIRED reported in 2016 that security researchers could discover the location of users of Grindr and similar apps. Last year BuzzFeed reported that Grindr shared users’ HIV status with other companies. (Grindr says it stopped doing this.) Senators Edward J. Markey of Massachusetts and Richard Blumenthal of Connecticut, both Democrats, sent a letter to Kunlun CEO Zhou Yahui grilling him about Grindr’s privacy practices.
Chinese companies have been expanding the presence in the US social media and technology market. For example, the popular video-sharing app TikTok is owned by the Beijing-based company Bytedance, and Chinese tech giant Tencent invested $150 million in Reddit earlier this year. (Reddit’s majority shareholder is Advance Publications, which also owns WIRED publisher Condé Nast.)
Meanwhile, regulatory maneuvers have become a front in the trade war between the US and China. Last year CFIUS blocked the sale of money-transfer service MoneyGram to Ant Financial, a company owned by Alibaba and its CEO Jack Ma, and China scuttled Qualcomm’s efforts to acquire the Dutch chipmaker NXP. Sometimes the logic behind these decisions can be obscure. For example, CFIUS blocked the Singapore-based chipmaker Broadcom from acquiring Qualcomm last year, arguing that consolidation in the semiconductor industry could help Chinese companies like Huawei, even though China had nothing to do with that particular deal.
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