Grindr/Kunlun: the break up
Despite a forced sale, the gay dating app looks attractive. Lonely hearts are big business
What makes Chinese ownership of gay social media app Grindr a threat to US national security? Blackmail is one possibility. Homosexuality is not illegal in either country but there are more than 70 countries where it is still considered a crime. Users may have other, more personal, reasons to keep accounts secret. Few would relish their photos and messages being made public.
But the forced sale of Grindr by Beijing Kunlun Tech is also connected to growing rivalry between US and China on technology and fears about the volume of personal data handled by social media apps. Grindr has more than 3m daily users who supply the location-based dating app with names, photographs, email addresses, personal messages and health data. The US is right to think carefully about who can access this.
The Committee on Foreign Investment in the US, or Cfius, has the power to unwind more deals concerning companies with access to personal information but there are no obvious deals that match Grindr’s. Either way, US social-media start-ups stand little chance of finding Chinese buyers from now on.
In spite of the forced sale, Grindr still looks attractive. Lonely hearts are big business. Tinder doubled revenue in the last year and shares in its owner Match Group are up 70 per cent since the start of 2018.
Kunlun bought Los Angeles-based Grindr in January last year for a reported $240m, two years after taking a majority stake. When it suggested floating the company last summer it boasted that the app had posted three years of profits thanks to premium subscriptions. If Grindr accounted for 4 per cent of Kunlun’s net profits in 2017, this suggests net profits of about $7m.
Larger rival Match Group seems a good candidate for buying Grindr. But Facebook might be convinced to take a look too. With a newly launched dating platform in need of publicity and a $41bn hoard of cash and marketable securities to use, the social network could be tempted to partner up.