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Amidst crackdown on tech companies, Chinese govt appoints director to board of ByteDance Beijing: Report

Apps like TikTok might not be affected by the move as ByteDance Beijing holds Chinese business licenses to TikTok-like app Douyin and news platform Toutiao.

A Chinese government-owned body has appointed a director to the board of ByteDance Beijing, the domestic subsidiary of ByteDance Ltd. after acquiring a 1% stake in it, according to a report by The Information

With the company’s operations are already controversial in the US and India – the latter has banned ByteDance’s TikTok following skirmishes along the Indo-China border last year – this is set to make things tougher. Objections to ByteDance’s operations are on the grounds that provisions in China’s laws require its companies to share their data if and when asked for by the government. With the government now making an appointment to the companies’ board of directors those concerns will only increase. In a report, Bloomberg quoted Michael Norris at consultancy AgencyChina to be saying that the government’s new stake in ByteDance’s domestic subsidiary “reignites debate in overseas markets as to whether TikTok could be a vehicle for state influence.”

The extent of Chinese government influence

On April 30, ByteDance sold a 1% stake in its domestic subsidiary to WangTouZhongWen (Beijing) Technology, which is owned by three Chinese government bodies. These are the China Internet Investment Fund, controlled by the Cyberspace Administration of China (CAC), China Media Group, the Party-controlled national broadcaster, and the Beijing municipal government’s investment arm.

ByteDance Beijing holds Chinese business licenses related to its TikTok-like app Douyin and news and content platform Toutiao. According to reports, the Chinese government does not hold a stake in ByteDance’s international operations handled by ByteDance Ltd. Thus, the new director, reported to be Wu Shugang, might not be involved with apps like TikTok which is not available in China.

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China’s crackdown on technology firms

The Chinese government has been coming down hard on multiple technology firms through competition regulation and enforcement of its stringent data privacy laws. In a report, Reuters quoted Paul Haswell, a Hong Kong-based partner at law firm Pinsent Masons saying that this could be “out of a concern within the Chinese government that private technology companies were gaining too much data and too much power.”

In July, WeChat or Weixin (as it is known in China) suspended registrations of new official and personal accounts on its platform. In a statement to Reuters, it said this was because the company was currently upgrading its security technology to align with “all relevant laws and regulations.”

Earlier that month, the CAC ordered app stores to remove ride-hailing app Didi Chuxing, the most popular ride-hailing app in China, citing serious violations on the collection and usage of personal data.

In June, The Wall Street Journal reported that the country was enacting new laws and measures that, “will subject almost all data-related activities to government oversight, including their collection, storage, use, and transmission.”

India’s ban on Chinese apps

Last year, over 200 Chinese apps were banned in India including apps like ByteDance-owned Tiktok and Tencent’s PUBG Mobile following skirmishes along the Indo-China border.

In a statement, the Ministry of Electronics and Information Technology had claimed to have received “many representations from citizens” regarding alleged security and privacy risks of these apps. The Indian Computer Emergency Response Team (CERT-IN) also received similar representations from citizens, per the statement.

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The government had also enforced restrictions on Foreign Direct Investments into Indian companies from India’s “neighbouring countries” last year, requiring such investments to get approved by the Ministry of Corporate Affairs.

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