TikTok CEO accused of limited decision-making power, restricted by ByteDance

 

TikTok CEO accused of limited decision-making power, restricted by ByteDance

TikTok , which is owned by Chinese internet company ByteDance, has recently sought to assuage U.S. lawmakers' concerns that it poses a national security threat. The viral video app insists it keeps ByteDance at arm's length and is run by its own executives.

“TikTok is led by its own global CEO, Zhou Shouzi, a Singaporean living in Singapore,” TikTok wrote in a letter to U.S. lawmakers in June .

But in fact, Zhou Shouzi has limited decision-making power over TikTok, according to 12 former TikTok and ByteDance employees and executives.

According to people familiar with the matter, the decision makers on TikTok are jointly made by Zhang Yiming , the founder of ByteDance, a senior strategic executive of ByteDance and the head of the TikTok R&D team, including measures to strengthen TikTok's live broadcast and shopping functions. . The people spoke on condition of anonymity out of fear of reprisals. TikTok's development and strategy is led by ByteDance's team, which reports not to Zhou Shouzi, but to ByteDance's Beijing office, they said.

The arrangements illustrate the tightrope walk that Zhou Shouzi, 39, faces as the head of one of the world's most popular social networking apps. Since his appointment as TikTok's CEO in May 2021, he has had to present himself to the West as an autonomous leader of global services while meeting the demands of the app's Chinese parent company.

Zhou Shouzi is facing more and more challenges. As TikTok has exploded into global popularity and amassed some 1.6 billion monthly active users, its ties to ByteDance have sparked concerns from regulators that it could leak data to Chinese authorities. In recent months, U.S. lawmakers and regulators have increasingly questioned TikTok's data practices , reigniting a debate about how the U.S. should approach business relationships with foreign companies.

TikTok's chief operating officer testified before Congress on Wednesday, downplaying the app's ties to China. On Thursday, President Joe Biden signed an executive order strengthening the powers of the federal government to block Chinese investment in U.S. technology and limit its access to U.S. citizens' private data.

TikTok said in the email that Zhou Shouzi was ultimately responsible for the app’s product and strategic decisions. Bytedance said he was familiar with the company's business.

Little is known about Zhou's funding and how he runs TikTok. But the former TikTok and ByteDance employee said he was focused on bringing financial discipline to the app amid the global economic downturn. He tightened budgets, shut down marketing trials and cut staff in North America as the app shifted more of its business to Singapore, they said. Zhou Shouzi also met with global corporate executives and European regulators.

At a meeting late last year, a TikTok employee asked Zhou Shouzi how he envisioned the app's 100-year future. "I just want to make money next year," he said at the time, according to three people who participated in the call.

Others say ByteDance has more control. "If he doesn't want to do what ByteDance wants him to do, he could be fired and someone else could take his place," said Salvatore Barbones, director of China and Free Society at the Center for Independent Studies, an Australian think tank. When talking about Zhou's funding, he said.

Zhou Shouzi has admitted that his familiar relationship with ByteDance dates back nearly 10 years ago, when he helped invest in the company.

“I’ve been in very close contact with the ByteDance people because I’ve been with them very early on,” he said in an interview with billionaire investor David Rubenstein in March . Rubinstein's company, The Carlyle Group, has a stake in the Chinese giant. Zhou Shouzi also said that he became familiar with TikTok as a "creator" and accumulated "185,000 fans". (He appeared to be referring to the company account where he posted his video when he was an executive at Xiaomi, one of China's largest phone makers.)

Born and raised in Singapore, Zhou Shouzi studied Economics at University College London and earned an MBA from Harvard University. In 2010, after interning at Facebook, he joined DST Global, the venture capital firm helmed by Russian billionaire Yuri Milner.

Zhou Shouzi, who can speak fluent Mandarin, became the leader of DST in China. He has struck some of the most lucrative deals in Chinese Internet history, including investments in e-commerce platforms JD.com and Alibaba and ride-hailing service Didi. In 2011, he helped DST lead a $500 million investment in Xiaomi.

In 2013, Milner asked Zhou Shouzi to meet Zhang Yiming, who founded a news aggregation app called Jinri Toutiao. The two struck up a good relationship, and that same year, an investment firm linked to Mr. Milner led a $10 million round for Mr. Zhang's company, three people familiar with the matter said.

The news aggregator eventually became ByteDance, which is now valued at about $360 billion, according to PitchBook, and owns TikTok, its Chinese sister app Douyin, and various education and enterprise software ventures.

By 2015, Zhou Shouzi joined Xiaomi as CFO. He led the device maker's 2018 initial public offering, oversaw its international push and became the brand's English-language face.

“Mr. Zhou grew up in the language and culture of the United States and China,” said Hugo Barra, a former Google executive who worked with Zhou at Xiaomi. "Objectively speaking, he is more suitable than anyone I have met in the Chinese business community to be an excellent executive taking into account both domestic and overseas markets in a Chinese company that wants to become a global giant."

In March 2021, Zhou Shouzi announced that he would join ByteDance as chief financial officer, triggering speculation that the company would go public. (The company remains privately held.)

Two months later, TikTok named Zhou Shouzi as chief executive , whom Zhang praised for his "deep understanding of the company and the industry." At the end of last year, Zhou Shouzi resigned from ByteDance to focus on TikTok.

TikTok has been without a permanent CEO since August 2020, when former Disney executive Kevin Mayer left TikTok after the Trump administration sought to separate the app from its Chinese parent company. China is also cracking down on domestic internet giants, with Zhang Yiming resigning from his official role at ByteDance last year. Zhang Yiming is still involved in decision-making, said people with knowledge of ByteDance.

During a visit to TikTok's Los Angeles office in mid-2021, Zhou Shouzi tried to portray himself as the app's new head. At a dinner with TikTok executives, he tried to get a restaurant in Culver City, Calif., to stay open longer in an effort to strike up a friendship, according to three people familiar with the matter. He asked attendees if they should buy the store so it could close later, they said.

During his trip to the U.S., he met with Ali Emanuel, head of talent and media company Endeavor, Disney CEO Bob Chapac, and spoke with NBA Commissioner Adam Silver, according to four people familiar with the matter. Meet and seek to establish potential business relationships.

But five people familiar with the matter said ByteDance had been considering outside reaction when choosing the TikTok chief executive. Mayer, who is based in Los Angeles, was hired because he was American at a time when TikTok wanted to differentiate itself from its Chinese parent, they said. They said Zhou was funded to navigate Western and Chinese business, while Singapore offered a hedge against any potential blow from China or the United States.

But both Mayer and Zhou Shouzi's powers as TikTok chiefs are limited by ByteDance, five people familiar with the matter said.

According to the above-mentioned people, the decision makers of TikTok’s core application and its functional modifications mainly include Zhang Yiming, ByteDance CEO and Zhang Yiming’s college roommate Liang Rubo, ByteDance strategy director Zhao Pengyuan, and TikTok R&D team leader Zhu Wenjia. They also said ByteDance executives guided TikTok's development by observing what was happening on Douyin. Douyin is the Chinese equivalent of TikTok.

Some people who have worked with Mr. Zhou said they don't know how well he understands the growing platform. Some employees were brought in to speak to Zhou about the latest trends on TikTok to boost his popularity, according to two people familiar with the scheme. Zhou Shouzi's account has 7,600 fans.

People familiar with Zhou’s funding activities said that Zhou’s funding is mainly active in TikTok’s financial and operational aspects.

In October, he shelved a multimillion-dollar marketing campaign for TikTok's non-fungible token project involving musicians Lil Nas X and Bella Pelch. He reprimanded TikTok’s global marketing chief during a video call with ByteDance’s leadership in Beijing after some celebrities pulled out of the project, four people familiar with the matter said. This, they said, showed that Zhou Shouzi reported directly to the top of the company.

Zhou Shouzi also closed an unfinished TikTok store near Melrose Avenue in Los Angeles, three people familiar with the matter said. TikTok briefly explored naming rights to a stadium in Los Angeles, formerly the Staples Center, they said.

He also oversaw layoffs of U.S. managers while building teams related to trust and safety, two of the people said. In its U.S. marketing, the app has shifted its focus, from being a brand that sparked trends and conversations , to a utility, as a place where people can learn .

In May, Zhou was funded to fly to Davos, Switzerland, to attend the World Economic Forum, where he discussed digital strategy with European regulators and Saudi Arabian ministers.

Most recently, he defended TikTok's data practices. In the app 's letter to U.S. lawmakers in June , he noted that ByteDance's employees in China have access to Americans' data but are "subject to a robust set of cybersecurity controls." But he said TikTok was working on a " Texas project " with U.S. software giant Oracle that was separating and protecting its U.S. user data.

“We know we are one of the most followed platforms,” Zhou Shouzi wrote.