TikTok Parent's Founder Zhang Yiming to Step Down as CEO -- 2nd Updatecn.yy

By Liza Lin in Singapore and Yoko Kubota in Beijing

ByteDance Ltd., the owner of popular short-video app TikTok, said its founder Zhang Yiming would step down as chief executive, the latest Chinese tech boss to resign as the government ramps up pressure on the sector.

Mr. Zhang appointed co-founder Liang Rubo as his successor and said he was stepping aside to focus on long-term strategy.

Concerns about the Chinese company's future in the U.S. have been fading as geopolitical uncertainty eases, only for Bytedance to face pressure at home.

The resignation of Mr. Zhang, 38 years old, follows those in March at financial-tech giant Ant Group Co. and e-commerce company Pinduoduo Inc. ByteDance had an executive shake-up in April, when Shou Zi Chew was named CEO of TikTok.

The executive transition will take place over six months, Mr. Zhang said in a letter to employees on Thursday. He will still remain on ByteDance's board of directors, a spokesman said.

"I believe I can best challenge the limits of what the company can achieve over the next decade, and drive innovation, by drawing on my strengths of highly focused learning, systematic thought, and a willingness to attempt new things," Mr. Zhang said in the letter, which the company posted online.

Beijing-based ByteDance, which counts Carlyle Group and Sequoia Capital among its backers, is one of China's most valuable startups, with a valuation of $180 billion as of December. Thanks to the popularity of TikTok in the U.S., Europe and elsewhere, it became one of the first Chinese internet companies to build a successful brand in the West.

Yet incoming CEO Mr. Liang, 38, inherits a company that is facing growing government pressure in China to stay in line.

In recent months, the company has been called in by authorities every few weeks. In April, ByteDance was among 34 of China's biggest tech companies that made public pledges to comply with the country's antimonopoly laws, shortly after e-commerce giant Alibaba Group Holding Ltd. was hit with a record $2.8 billion in antitrust fines.

Its infractions have included improper big data usage and problematic content. Last month, ByteDance was among 13 companies ordered by the central bank and other regulators to adhere to much tighter regulation of their data and lending practices.

In March, the antitrust regulator fined ByteDance's subsidiary the equivalent of about $78,000 for having failed to properly report a previous merger. Around then, ByteDance was one of 11 companies ordered to conduct a security review over the use of what is known as deepfake technology, enabling the creation of hyper-realistic fake videos. Meanwhile, the ByteDance subsidiary that operates Douyin, its domestic Chinese short-video service, was fined twice this year with a total penalty of $9,300 over improper content.

Mr. Liang shares a close relationship with Mr. Zhang. They were dorm roommates at Nankai University, where Mr. Liang graduated with a microelectronics degree. Together, the two also founded a startup focusing on real estate before starting ByteDance.

"This is a great challenge for me and the pressure is big," said Mr. Liang, the current head of human resources and management at the company, in a letter to employees seen by The Wall Street Journal. He has also previously served as the company's head of research and development.

ByteDance has built a good team, he said, adding, "I believe we can continue to make breakthroughs and reach new heights with everyone's cooperation and efforts."

TikTok's global success has placed it and ByteDance under scrutiny in the West. The U.S. government has investigated whether TikTok poses a risk to national security over concerns that China could have access to the personal data of American users.

TikTok has tried to distance itself from its Chinese roots through various initiatives. Still, the Trump administration issued an executive order last year that would ban the app unless it found an American buyer. Oracle Corp. and Walmart Inc. were in a group having talks to buy TikTok's U.S. operations, which Mr. Zhang fiercely resisted. Then, the Biden administration in February shelved plans to require the sale.

Raffaele Huang contributed to this article.

Write to Liza Lin at [e-mail] and Yoko Kubota at [e-mail]

(END) Dow Jones Newswires

05-20-21 0434ET