By Liza Lin in Singapore and Yoko Kubota in Beijing
The move by the founder of TikTok's parent company to step down
as chief executive makes him the latest in a series of Chinese
internet entrepreneurs to leave the spotlight as authorities
tighten the reins on the nation's tech giants.
ByteDance Ltd., one of the world's most valuable closely held
tech companies, said Thursday that CEO Zhang Yiming, an engineer by
training, would step aside to focus on long-term strategy.
Co-founder Liang Rubo was appointed as his successor.
The departure of Mr. Zhang, 38, the largest single shareholder
in a company valued in December at $180 billion, follows the
resignations of top executives at financial-tech giant Ant Group
Co. and e-commerce company Pinduoduo Inc.
In March, Ant CEO Simon Hu said he would step down, amid
heightened scrutiny by regulators, and barely a week later, Colin
Huang, the 41-year-old founder of Pinduoduo, one of China's largest
online shopping platforms, announced he would vacate his position
as chairman to pursue personal interests.
Once seen as powerful and untouchable for their contribution to
innovation and economic growth, China's largest internet companies
have increasingly come under intense scrutiny by authorities, with
regulators coming down since late last year hard on areas such as
anti-monopolistic practices and data privacy.
Other high-profile internet founders such as Alibaba Group
Holding Ltd.'s Jack Ma and Wang Xing, the head of online delivery
juggernaut Meituan, have come under fire for public comments in
speeches or social media. Mr. Ma and his sprawling e-commerce and
payments empire have been the hardest hit so far, with Alibaba
slapped with a record $2.8 billion fine by antitrust regulators in
April.
"In this day and age, every internet CEO has to think about the
regulatory crackdown," said Ian Goh, the Shanghai-based general
partner of 01VC, a venture-capital firm that invests in Chinese
technology companies. He described Mr. Liang's appointment at
ByteDance as "putting in place a trusted lieutenant, and it gets
yourself out of the spotlight."
Incoming CEO Mr. Liang, 38, shares a close relationship with the
ByteDance founder. He was Mr. Zhang's dorm roommate at Nankai
University, where he graduated with a microelectronics degree.
Together, the two also founded a startup focusing on real estate
before starting ByteDance in 2012.
"This is a great challenge for me and the pressure is big," Mr.
Liang, who is currently its head of human resources and management,
said in a letter to employees seen by The Wall Street Journal. "I
believe we can continue to make breakthroughs and reach new heights
with everyone's cooperation and efforts."
Mr. Liang, who previously served as the company's head of
research and development, inherits a company that is facing growing
government pressure in China to stay in line.
Beijing-based ByteDance has attracted attention from regulators
in recent months over infractions ranging from data use to improper
content. The company, which counts Carlyle Group and Sequoia
Capital among its backers, also owns and operates a suite of
popular apps. They include Douyin, TikTok's sister short-video app
in China, news-aggregation app Jinri Toutiao, and business
enterprise platform Lark.
In April, ByteDance was among 34 of China's biggest tech
companies that made public pledges to comply with the country's
antimonopoly laws, shortly after e-commerce giant Alibaba was hit
with its record fine.
In March, the antitrust regulator fined a ByteDance subsidiary
the equivalent of about $78,000 for having failed to properly
report a previous merger. Around then, ByteDance was one of 11
companies ordered to conduct a security review over the use of what
is known as deepfake technology, which enables the creation of
hyper-realistic fake videos. Meanwhile, the ByteDance subsidiary
that operates Douyin was fined twice this year over improper
content.
Bytedance was also among 13 companies ordered last month by the
central bank and other regulators to adhere to much tighter
regulation of their data and lending practices.
Mr. Zhang didn't refer to China's darkening environment for tech
companies in a letter to employees on Thursday.
"I believe I can best challenge the limits of what the company
can achieve over the next decade, and drive innovation, by drawing
on my strengths of highly-focused learning, systematic thought, and
a willingness to attempt new things," Mr. Zhang said in the letter,
which was posted online by the company. He will remain on
ByteDance's board of directors, a spokesman said.
People who work with him say Mr. Zhang is introverted and
prefers engineering over handling government relations. ByteDance
is expanding into online shopping and education, areas that have
come under fresh government scrutiny recently, and the increased
government engagement would be unappealing for Mr. Zhang, one
senior employee at the company said.
"It's always been the case that a big part of any top CEO's job
in China is government relations, and I doubt Yiming is very
comfortable schmoozing with officials," said Matthew Brennan, a
China tech analyst who has published a book on ByteDance.
Mr. Brennan said ByteDance's overall strategy was unlikely to
change and Mr. Zhang had long ago started preparing for a
transition. Over the past two years, the founder has gradually
transferred management responsibilities to other staff, appointing
leaders for its China operations, Mr. Brennan said.
Most recently, Shou Zi Chew, the chief financial officer, was
named CEO of TikTok.
Mr. Zhang steered the company through turbulent times in the
U.S. The U.S. government last year investigated whether TikTok
poses a risk to national security over concerns that China could
have access to the personal data of American users; the Trump
administration issued an executive order last year that would ban
the app unless it found an American buyer.
The order was never enforced and the Biden administration in
February shelved plans requiring the sale.
Mr. Brennan said ByteDance would lose a leader known for his
cool head and persistence.
"That really helped last year with them holding out and not
selling TikTok -- perhaps another CEO would have been more
emotional," he said.
--Raffaele Huang contributed to this article.
(END) Dow Jones Newswires
May 21, 2021 00:48 ET (04:48 GMT)
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