A VC who was part of a deal that tried to buy TikTok for $20 billion says US national security concerns of the app are valid
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If Anis Uzzaman, CEO and managing partner of Pegasus Tech Ventures, had a chance to invest in TikTok's parent ByteDance today, he would probably take it, he told Business Insider, but only if the Trump administration's war with the Chinese-headquartered company didn't kill its growth. That's a big if. On Sunday new downloads of TikTok will be banned in the US, the Commerce Department said on Friday. Should that take place, it would kill US growth by definition. Uzzaman is probably better known these days as a major backer of one of TikTok's biggest US competitors, Los Angeles-based Triller. Uzzaman did, at various points, have a chance to get a piece of TikTok, he said. He was in the mix to invest in its predecessor, Musical.ly, he said. During his due diligence on the growth rate of Musical.ly he looked at Triller and went with Triller instead. "When we invest, we not only look at founders, we look at the tool, functionality, and also look at growth rate. That's what inspired us to invest in Triller. It was before all this TikTok nonsense started. Had we had a chance to invest in TikTok and seen its growth rate, obviously, we would have invested in that," he said. He was also involved in Triller's $20 billion bid to buy TikTok, right after news broke that Microsoft was working on its deal. Triller had lined the financing up through global investment bank Centricus, Uzzaman said. (Centricus is best known for its work helping SoftBank create its $100 billion Vision Fund, including raising money from Saudi Arabia.) Obviously, that deal didn't happen and Oracle walked away the winner. (When asked about Triller's bid, a TikTok spokesperson told Bloomberg, "What's Triller?" Another called Triller and Centricus' bid "preposterous.") But, given how TikTok has become the rope in Trump's tug of war with China, Uzzaman is happy with his choice and says Triller is the direct beneficiary of it, pointing out that a number of high-profile TikTok creators have recently leapt from TikTok to Triller, including Josh Richards, a teenager with 20 million TikTok followers who's been hired as Triller's chief strategy officer, Griffin Johnson, Charli D'Amelio, and others. And while he would be delighted to have a stake in TikTok somehow, he says that the US is not wrong in imagining the potential security dangers that TikTok could pose if the US version of the app remains tied to a Chinese corporation. "I personally think that, because the ways the [Chinese] laws are wrapped around these technologies, it could be dangerous. I think the fear the US government has is valid, valid in the sense that if there is a conflict in the future ... this data could be used in the wrong ways," he said. Chinese law requires tech companies to give the government access to data if it requests it. And "at the end of the day," Uzzaman argues, ByteDance and its darling app TikTok are Chinese tech companies. (ByteDance has said it does not hand over user data to the Chinese government, and that it stores TikTok user data in the US, outside of China's reach.) But the data TikTok collects, like that of most major apps, can be used to learn a lot about a person: when they wake up and first open their phone, when they go to bed, when they have free time (and are using TikTok). Also what they watch, who they share it with, their comments, can also reveal a lot of personal information. "People don't realize how dangerous this data can be. And it can be used in the wrong ways," he said. That data collection is also what makes TikTok so valuable to big enterprise companies like Microsoft and Oracle that are looking for ways to get a piece of the kind of data collection action that has powered the likes of Facebook and Google. Is this just a sour-apples opinion from an investor of a competitor who's bid at buying TikTok failed? Uzzaman says he understands why some people might believe that, but he says, "I have invested in 180 startups and I have looked at hundreds maybe thousands of companies. I invested in Triller because of its own merit when I knew TikTok existed because I thought they could both grow." Uzzaman's view on China isn't all negative, either. Pegasus has operations in China, ranging from venture investments from Chinese-dedicated funds to startup accelerators in two Chinese cities, run with corporate partners like Amazon Web Services. His take on doing business in China? "Whatever happens in China stays in China," he says. Likewise, he says that the US funds that Pegasus manages do not invest in China. Pegasus has $1.5 billion under management, he says, and manages 28 funds that range in size from $20 million to $200 million.
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