April 1, 2019 / 4:40 PM / 8 months ago

China's Kunlun in talks with U.S. over Grindr: filing

(Reuters) - Chinese gaming company Beijing Kunlun Tech Co Ltd said on Monday that it was in talks with U.S. government authorities about whether it should continue to own popular gay dating app Grindr LLC.

Grindr app is seen on a mobile phone in this photo illustration taken in Shanghai, China March 28, 2019. REUTERS/Aly Song/Illustration

Reuters reported last week that the Committee on Foreign Investment in the United States (CFIUS), a U.S. government panel that scrutinizes deals for national security risks, had asked Kunlun to sell Grindr, spurred on by data privacy concerns.

“We are in talks with CFIUS at the moment. We have not reached any agreement with CFIUS as of the day of the announcement. We will disclose any future development,” Kunlun said in a brief filing with the Chinese Securities Regulatory Commission.

The development represents a rare high-profile example of CFIUS seeking to undo 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, making it vulnerable to such an intervention, Reuters reported last week.

CFIUS has not disclosed its specific concerns. However, the United States has been increasingly scrutinizing app developers over the safety of personal data, especially if some of it involves U.S. military or intelligence personnel.

Grindr collects personal information submitted by users, including location, messages, and in some cases even someone’s HIV status, according to its privacy policy.

Kunlun said last August it was preparing for an initial public offering (IPO) of Grindr.

As a result of CFIUS’ intervention, Kunlun has shifted its focus to an auction process to sell Grindr outright, given that the IPO would have kept Grindr under Kunlun’s control for longer, Reuters reported.

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 about how the app would protect users’ privacy under its Chinese owner.

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.

Zhou has said that the overseas market is the root of Kunlun’s business, accounting for 70 percent of Kunlun’s revenue.

Reporting by Echo Wang in New York; Editing by Meredith Mazzilli

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