A GOP megadonor’s firm helped sow the seeds for the rise of TikTok through its investments in a key search engine technology, The New York Times reported on Thursday, citing a trove of court documents.
ByteDance has been accused by lawmakers and the intelligence community of acting on behalf of Beijing and providing TikTok user data to the Chinese Communist Party (CCP). American billionaire and election donor Jeff Yass’ firm, Susquehanna International Group — which was previously reported to own 15% of ByteDance — had a hand in incubating a search engine algorithm that would eventually be utilized by TikTok’s parent company, according to court documents reviewed by the Times. (RELATED: Beijing Scrambles To Defend TikTok Amid Looming Threat Of US Ban)
TikTok has repeatedly denied that it has ties to the CCP, yet a former senior ByteDance employee has alleged that CCP members inside the company have “superuser” credentials and a “backdoor channel” to access American users’ data. Further, the app often promotes content for users that mirrors the CCP’s political agenda, according a recent study by the Network Contagion Research Institute and Rutgers University found.
Yass is reportedly lobbying lawmakers to block legislation that could force ByteDance to sell TikTok or face a ban, according to the New York Post, citing anonymous sources on Capitol Hill. One source described the effort as “bullying,” and another said that Yass is threatening to pull funding for any lawmaker that supports the ban, the outlet reported.
The court records — which were resealed after the Times asked questions of Susquehanna’s lawyers, who said they should have not been made public to begin with — emerged as part of a lawsuit filed against Susquehanna by the company’s former contractors and included emails, messages and documents.
Susquehanna subsidiary, SIG China, invested in a Chinese-based real-estate startup, 99Fang, in 2009, and selected a man named Zhang Yiming as the chief executive officer, according to the Times. Part of 99Fang’s strength as a company was its search engine algorithm, which Zhang described in a 2012 email as “very powerful.”
“We have recruited the top engineer of the housing channel back to lead the technical team,” an internal memo circulated by SIG employees says, according to the Times.
The headquarters of ByteDance, the parent company of video sharing app TikTok, is seen in Beijing on September 16, 2020. (Photo by GREG BAKER/AFP via Getty Images)
Realizing that the search technology had wider potential applications, Zhang left 99Fang and eventually founded a startup in the app space, according to a 2012 email reviewed by the Times. SIG China reportedly helped steer Zhang’s exit from 99Fang; one SIG employee met with Zhang to discuss the idea that would be the genesis of a social media platform called Xiangping, defined “share comments” in English, which would eventually evolve into ByteDance.
Zhang sought Susquehanna’s “understanding and permission” to exit 99Fang and launch another venture, according to a 2012 investment memo filed by the SIG China employee who met with Zhang.
Zhang wrote in an investment memo in 2012 that he saw the platform as a way to provide users with content chosen for them based on their preferences, according to the Times. Susquehanna’s SIG China had poured millions into Xiangping by 2012 and went on to contribute “hundreds of millions in further investments” into the company, according to court documents.
Susquehanna’s gamble on Zhang paid off in spades, and the firm now has tens of billions of dollars at stake as lawmakers muse legislation that could ban TikTok unless ByteDance sells the platform, according to the Times. Zhang stayed on as CEO of ByteDance until 2021.
Yass, who personally owns a 7% share in ByteDance, potentially has billions at stake if the legislation is passed, according to the Times. Yass is the biggest donor in the 2024 election cycle, having donated nearly $46 million to Republican causes ahead of elections in November, according to watchdog group OpenSecrets.
Susquehanna, TikTok and ByteDance did not immediately respond to a request for comment.
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