The Committee on Foreign Investment in the United States (CFIUS) has told Chinese gaming company Beijing Kunlun Tech Co Ltd that Grindr constitutes a national security risk, two sources told Reuters. Grindr, originally based in West Hollywood, was purchased by Kunlun in 2016.
The U.S. government is closely monitoring foreign app developers because the apps collect personal information, leaving officials especially concerned if app users are members of U.S. military or intelligence.
Grindr’s owners said in August they were selling the company through an initial public offering (IPO), but the reports from the CFIUS have reportedly convinced Kunlan to pursue different sales process. Instead of pursuing an IPO, that would have kept Grindr under Kunlan’s control longer, the Chinese firm decided on an auction process to sell Grindr outright.
The Chinese company achieved the majority stake in Grindr for $93 million in 2016. Kunlan acquired the company through a series of separate negotiations between 2016 and 2018 but never formally submitted the acquisition to be reviewed by the CFIUS.
U.S. senators Edward Markey, D-Mass., and Richard Blumenthal, D-Conn., sent a letter to Grindr in 2018 demanding the Chinese firm detail how it planned to protect the privacy of its users. The CFIUS intervened in the Grindr deal in order to secure the personal safety and data of users from being freely distributed by foreign companies.
The committee also blocked Chinese companies from purchasing the U.S. money transfer company MoneyGram International Inc and mobile marketing firm AppLovin due to similar concerns.
Kunlan hired the investment bank Cowen Inc. to handle the sale of Grindr. Several U.S. investment firms are interested in buying the company, reported Reuters.