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ByteDance Is Seeking a New CEO for Its TikTok Business

Kurt Wagner and Sarah Frier

(Bloomberg) -- Chinese internet giant ByteDance Inc. is seeking a new chief executive officer for its TikTok business, a hugely popular video app that American politicians have targeted as a potential security threat.

The company has interviewed candidates in recent months for the CEO role, which would be based in the U.S., according to people familiar with the matter, who asked not to be named because the search is private. In one potential scenario, the new CEO would oversee TikTok’s non-technical functions, including advertising and operations, while current TikTok chief Alex Zhu would continue to manage the majority of product and engineering out of China, one person said. The hiring process is ongoing and the envisioned role could still change depending on who is selected, the people added.

Zhu, who co-founded a predecessor to TikTok called Musical.ly, took over the business last year, though ByteDance also has a Chinese version of TikTok called Douyin, which is run by a different management team. The eventual corporate structure involving Zhu and the new CEO is still unclear, the people said, and Bytedance has hired executive search firm Heidrick & Struggles to help lead the process.

A spokesman for TikTok declined to comment. Heidrick & Struggles didn’t respond to a request for comment.

The new hire won’t affect the role of Vanessa Pappas, who currently oversees TikTok’s U.S. operations from Los Angeles, one person said. In a blog post Wednesday, Pappas wrote that TikTok has opened a new Culver City office with plans to “scale our local operations,” and now has more than 400 U.S. employees.

“While we are a global company, having a permanent office in LA speaks to our commitment to the U.S. market and deepens our bonds with the city, and the talent and companies, that call it home,” she wrote.

Beijing-based ByteDance, led by CEO Yiming Zhang, has built TikTok and Douyin into some of the world’s most popular apps with more than a billion users between them who share short video clips of things like lip-syncing and dance videos. That has made ByteDance the most valuable tech startup in the world, challenging the dominance of U.S. companies like Facebook Inc. and Snap Inc.

The app is growing fast and drawing a lot of attention from advertisers and competitors. Snap CEO Evan Spiegel said over the weekend he thought TikTok alone could grow to be larger than Instagram, which has more than 1 billion active users and has been the go-to social media destination for young people in the U.S.

With rising tensions between China and the U.S., however, American politicians have warned the app represents a national-security threat. The Committee on Foreign Investment in the U.S., better known as CFIUS, has begun a review of ByteDance’s 2017 purchase of the business that became TikTok, Bloomberg News reported in November.

ByteDance is weighing a range of options to address those concerns, from an aggressive legal defense to the sale of a stake in TikTok, Bloomberg News reported in December. A representative for the company said at the time there have been no discussions about any partial or full sale of TikTok.

“I remain deeply concerned that any platform or application that has Chinese ownership or direct links to China, such as TikTok, can be used as a tool by the Chinese Communist Party to extend its authoritarian censorship of information outside China’s borders and amass data on millions of unsuspecting users,” U.S. Senator Marco Rubio, a Republican from Florida, wrote in a letter to the Treasury Department, which chairs CFIUS.

The hiring of a new U.S. CEO may be aimed at resolving those security concerns, the people said. It’s possible ByteDance is searching for a candidate who could help address questions in Washington or for someone with the skills to lead an independent business if it faces pressure to separate TikTok from the Chinese parent. It’s unclear how much autonomy this new CEO would have. A number of successful tech companies are led by CEOs who also have influence over product direction, including Facebook, Snap and Twitter.

ByteDance would prefer to maintain full control of the business if possible, given its soaring popularity and profit potential, Bloomberg News reported earlier. It may argue that TikTok presents no security threat or that the U.S. has no legal standing over the business.

TikTok has said it strives to create a safe and positive online environment. “We are not influenced by any foreign government, including the Chinese government; TikTok does not operate in China, nor do we have any intention of doing so in the future,” the company said in October.

(Updates with detail on search company in the third paragraph.)

--With assistance from Zheping Huang.

To contact the reporters on this story: Kurt Wagner in San Francisco at kwagner71@bloomberg.net;Sarah Frier in San Francisco at sfrier1@bloomberg.net

To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Jillian Ward, Andrew Pollack

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