LDN - Business

TikTok CEO Mayer quits after three months, just as firm challenges U.S. ban

[August 27, 2020] By Yingzhi Yang and Kanishka Singh

(Reuters) - TikTok CEO Kevin Mayer has left the Chinese-owned video app firm just three months since joining, and only days since the company sued the administration of U.S. President Donald Trump over an executive order effectively banning it in the United States.

He will be replaced by U.S. General Manager Vanessa Pappas on an interim basis, TikTok said in a statement.

The resignation comes at a tricky time for super-fast growing TikTok as it tries to persuade both the United States and India that it is not a security threat, while at the same time holding discussions with prospective buyers following a second U.S. order demanding the sale of its U.S. operations.

Mayer was Walt Disney Co's <DIS.N> top streaming executive before becoming chief executive officer of TikTok and chief operating officer of parent ByteDance on June 1.

"In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for," Mayer said in an letter to employees.

"Against this backdrop, and as we expect to reach a resolution very soon, it is with a heavy heart that I wanted to let you all know that I have decided to leave the company."

ByteDance founder and CEO Zhang Yiming said in a separate letter reviewed by Reuters that the company was "moving quickly to find resolutions to the issues that we face globally, particularly in the U.S. and India".

He said Mayer had joined just as the company was "entering arguably our most challenging moment."

"It is never easy to come into a leadership position in a company moving as quickly as we are, and the circumstances following his arrival made it all the more complex," Zhang said.

LITTLE SURPRISE

ByteDance employees told Reuters they were not surprised by Mayer's decision given TikTok's unpredictable future, and also because the ex-Disney executive has not had a significant role in some important decisions as he was still new to the team.

Zhang has been the key person in TikTok sale talks, said two people with knowledge of the matter. But Mayer represented TikTok to discuss with senior executives of interested buyers just days ago, a third person said.

TikTok's decision to launch a $200 million "creator fund" in July was spearheaded by TikTok's former head Alex Zhu, though Mayer was also directly involved, said two of the people. The project was initiated internally much earlier than Mayer's arrival, one of the people said.

"The learning curve was steep for him, from daily operations to geopolitical implications," said one of the people.

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China and U.S. flags are seen near a TikTok logo in this illustration picture taken July 16, 2020. REUTERS/Florence Lo/Illustration

ByteDance did not immediately respond to Reuters' request for comment.

"Whether TikTok reaches an agreement to sell its U.S. business or decides to duke it out in the courts, the role for Mayer will not be anything like that he had envisioned when he joined," said Mark Natkin, managing director of Marbridge Consulting in Beijing.

Mayer's departure is not a great boost for company morale right now, Natkin said.

His successor Pappas joined TikTok in January 2019 as U.S. general manager. She was previously global head of Creative Insights at Google's YouTube, her LinkedIn profile showed.

U.S, INDIA CHALLENGES

Amid growing distrust between Washington and Beijing, Trump complained that TikTok was a national security threat and could share information about users with China's government.

Trump issued an executive order banning U.S. transactions with TikTok on Aug. 6, effective in mid-September. He issued a separate order about a week later giving ByteDance 90 days to divest of TikTok's U.S. operations and data.

ByteDance has been in talks to sell TikTok's North American, Australian and New Zealand operations which could be worth $25 billion to $30 billion to companies including Microsoft Corp <MSFT.O> and Oracle Corp <ORCL.N>, people with knowledge of the matter have said.

The company has also been targeted in India, where TikTok was one of 59 Chinese apps banned by the Indian government in June following a border clash between India and China.

That month, Mayer wrote to India's government saying China's government has never requested user data, nor would TikTok turn it over if asked.

TechCrunch reported earlier this month that ByteDance was in talks with India's Reliance for investment in TikTok.

TikTok has become a global sensation since ByteDance launched the app in 2017, with operations in countries such as France, South Korea, Indonesia, Russia and Brazil. In April, the app hit 2 billion downloads globally.

(Reporting by Yingzhi Yang in Beijing, Kanishka Singh in Bengaluru and Katie Paul in San Francisco; Writing by Brenda Goh; Editing by Anil D'Silva and Christopher Cushing)

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