US government panel has informed Beijing Kunlun Tech that its ownership of Grindr constitutes a national security risk

This article is more than 1 year old

This article is more than 1 year old

Chinese gaming company Beijing Kunlun Tech Co Limited is seeking to sell Grindr, the popular gay dating app it has owned since 2016, after a US government national security panel raised concerns about its ownership, according to people familiar with the matter.

The Committee on Foreign Investment in the United States (CFIUS) has informed Kunlun that its ownership of West Hollywood, California-based Grindr constitutes a national security risk, the two sources told Reuters.

CFIUS’s specific concerns and whether any attempt was made to mitigate them could not be learned. The United States has been increasingly scrutinizing application developers over the safety of personal data they handle, especially if some of it involves US military or intelligence personnel.

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Kunlun had said last August it was preparing for an initial public offering (IPO) of Grindr. As a result of CFIUS’ intervention, Kunlun has now shifted its focus to an auction process to sell Grindr outright, given that the IPO would have kept Grindr under Kunlun’s control for a longer period of time, the sources said.

Grindr has hired US investment bank Cowen to handle the sale process, and is soliciting acquisition interest from US 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 submitting the acquisition for CFIUS review, according to the sources, making it vulnerable to such an intervention.

The sources asked not to be identified because the matter is confidential.

Kunlun representatives did not respond to requests for comment. Grindr and Cowen declined to comment. A spokesman for the US Department of the Treasury, which chairs CFIUS, said the panel does not comment publicly 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.

