Kunlum agrees to sell popular social app Grindr for US$608m

CHINA – Chinese gaming company Beijing Kunlun Tech Co Ltd has said that it has agreed to sell Grindr LLC, a popular gay dating app it acquired in 2016, to San Vicente Acquisition LLC for about $608.5 million.

Based in West Hollywood, California, Grindr has over 4.5 million daily active users, and describes itself as the world’s largest social networking app for gay, bisexual, transgender and queer people.

The app, originally developed in Los Angeles, raised national security concerns after it was acquired by Beijing Kunlun in 2016 for $93 million.

Democratic U.S. Senators Edward Markey and Richard Blumenthal sent a letter to Grindr in 2018 demanding answers about how the app would protect users’ privacy under its Chinese owner.

Reuters also reported last year that Kunlun had given some Beijing-based engineers access to the personal information of millions of Americans, including private messages and HIV status.

That ownership was later scrutinized by a U.S. government national security panel, the Committee on Foreign Investment in the United States (CFIUS), which is reported to have CFIUS expressed concern that data from the app’s some 27 million users could be used by the Chinese government.

 According to Tech Crunch, CFIUS reportedly told the Beijing-based parent company Kunlum that its ownership of Grindr constituted a national security threat and thus asked it to divest itself from the app.

The pressure on Kunlum is however not an isolated case as the United States has been increasingly scrutinizing app developers over the safety of personal data they handle, especially if some of it involves U.S. military or intelligence personnel.

San Vincente Acquisition comprises a group of entrepreneurs and investors in the technology, media and telecommunications industries, a source close to the deal told Reuters.

One of the investors in the group that is nearing a deal to acquire Grindr is Chinese-born U.S. citizen James Lu, a former executive at Chinese search engine giant Baidu, Tech Crunch reported.

The identity of the other investors in the consortium could not immediately be learned.

Kunlun is one of China’s largest mobile gaming companies. It acquired a majority stake in Grindr in 2016 for $93 million and bought out the remainder of the company in 2018.

It did so without submitting the transactions for CFIUS review.

CFIUS’ subsequent intervention in the Grindr deal underscored its focus on the safety of personal data, after it blocked the acquisitions of U.S. money transfer company MoneyGram International Inc  and mobile marketing firm AppLovin by Chinese bidders.

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