Chinese Conglomerate To Sell Gay Dating App After US Raises National Security Concerns

Any US intelligence assets who also happen to be Grindr power users can breath a sigh of relief.

After reportedly deciding that a Chinese conglomerate's ownership of the popular LGBTQ dating app constitutes a "national security risk" CFIUS - the Committee on Foreign Investment in the United States - has successfully pressured the firm to put the app up for sale.

Grindr

Reuters reported Wednesday that Chinese gaming company Beijing Kunlun Tech Co Ltd is looking to sell Grindr to a US investment firm, or possibly to a competitor, after CFIUS threatened to force a divestiture.

Foreign companies aren't required to submit deals to CFIUS (reviews are voluntary). And though it's rare, this isn't the first time CFIUS has pushed to reverse an acquisition of a US company by a Chinese firm.

Prior examples include China National Aero-Technology Import and Export Corporation’s acquisition of Seattle-based aircraft component maker Mamco, Ralls Corporation’s acquisition of four wind farms in Oregon, and Ironshore Inc’s sale of Wright & Co, which provides professional liability coverage to government employees like law enforcement personnel, to Starr Companies. CFIUS isn't required to disclose its reasoning in these cases, because disclosures could reveal the agency's classified conclusions.

Exactly why CFIUS wouldn't want a state-linked Chinese conglomerate having unfettered access to such a sensitive trove of user data isn't difficult to infer. According to Grindr's user agreement, the app collects a trove of personal data, including users' location and, in some cases, HIV status. In recent years, CFIUS has been more aggressive about blocking acquisitions where apps that collect user data are involved. Recent examples include MoneyGram and Applovin.

Hedge fund manager Kyle Bass put these concerns even more bluntly in a tweet, where he claimed that the acquisition of Grindr was part of a Chinese plot to blackmail US personnel.

Senators Edward Markey and Richard Blumenthal also drew attention to these concerns when they sent a letter to Grindr last year demanding to know how the app would protect user data under Chinese ownership.

Kunlun took over Grindr in two separate deals between 2016 and 2018 acquiring a majority stake in 2016 for $93 million, and buying out the rest of the company in 2018. And unlike Washington's objections about Huawei, the Chinese telecoms giant, posing a national security threat, the risks associated Grindr are even more immediate.

Given the sheer number of Chinese firms acquiring and investing in US apps, combined with the heightened scrutiny of user data privacy, this might not be the first deal to be undone by CFIUS, raising another potential point of conflict in the ongoing US-China trade feud. But at least in this case, the prospect of China's MSS blackmailing US intelligence agents, or other government employees, with embarrassing revelations about their sex lives, is just too horrifying to ignore.