In 2009, long before Jeff Yass donated millions to Republicans, his company, Susquehanna International Group, invested in a Chinese real estate startup that prided itself on its sophisticated search algorithm.
The company, 99Fang, offered buyers the opportunity to find the perfect home. Behind the scenes, employees of a Chinese subsidiary of Susquehanna were very involved: according to documents, they were the ones who had the idea for 99Fang and who chose its CEO. The latter, these employees write in an email, is not the “real founder” of 99Fang.
As a real estate platform, 99Fang has been a failure. But according to a lawsuit filed by Susquehanna contractors, 99Fang’s CEO – and the search algorithm – resurfaced at another Susquehanna company: ByteDance, owner of TikTok, now valued at US$225 billion, according to CB Insights, a company that tracks venture capital.
PHOTO FROM THE YASS PRIZE X ACCOUNT
Jeff Yass, center, with his wife and recipient of an education grant from The Yass Prize Foundation
ByteDance is also at the heart of a storm in Washington, where some elected officials consider the company a threat to American security. They are studying a bill that would break up the company. The man Susquehanna chose to run 99Fang, Zhang Yiming, became the founder of ByteDance.
Legal documents reveal the complex genesis of ByteDance and TikTok. There are emails, other messages and memos – from Susquehanna – that describe mixed business success, founder-investor tensions and, ultimately, a powerful search engine that only needed the right vocation.
These documents also show that Susquehanna, Mr. Yass’s company, was more involved in the creation of TikTok than previously thought. Susquehanna was known to own about 15% of ByteDance, but the documents prove that she was not a passive investor: she actively promoted Mr. Zhang’s career and approved the idea of creating ByteDance.
The US Congress is currently determining whether TikTok gives its Chinese owner the power to sow discord and disinformation in the United States. This debate puts tens of billions at stake for Susquehanna. For its founder, Jeff Yass, this is a stake that could reach several billions.
46 million in donations to Republican candidates
Mr. Yass, a former professional poker player, is also the largest donor this election cycle: his 2023 contributions exceed 46 million, according to OpenSecrets, a research group that tracks election financing.
Susquehanna turned over Yass’ emails as part of the lawsuit. But those emails are not in the public record and Mr. Yass’s role in the creation of ByteDance remains unknown.
The documents stem from a lawsuit in Pennsylvania. Former subcontractors of Susquehanna accuse him of having transferred the search algorithm from 99Fang to ByteDance without compensating them. Susquehanna rejects these accusations and says ByteDance did not receive any technology from the real estate site.
The file was revealed this month. After the New York Times downloaded them and asked questions, Susquehanna’s lawyers said the documents were made public in error. The judge resealed it on Tuesday.
Lawyers for both sides declined to comment. Questions and messages to ByteDance, Mr. Yass and Mr. Zhang went unanswered.
PHOTO MARK MAKELA, THE NEW YORK TIMES ARCHIVES
Entrance to the Susquehanna International Group headquarters in Philadelphia. Susquehanna began investing in ByteDance more than a decade ago.
The two sides disagree on the origins of ByteDance’s technology, but the documents clearly indicate that ByteDance was born from 99Fang’s real estate efforts. “Our search, image processing, recommendation, etc., are very powerful,” Zhang wrote in a 2012 email, “but when applied to real estate, they are very limited.”
Instead of offering homes to buyers, Mr. Zhang had the idea in 2012 to offer people light content, developing prototype pages called Funny Pictures and Pretty Babes. This “sister company” would share technology with the real estate site.
Years later, a Susquehanna director in China would write to a colleague that the investment in the real estate site had led to “the birth of ByteDance.”
What happens next?
The Pennsylvania lawsuit may end up in court, but no date has been set.
PHOTO KENT NISHIMURA, THE NEW YORK TIMES
Republican elected official Mike Gallagher, from Wisconsin, wants to ban TikTok and force its division. For Jeff Yass, billions of dollars are at stake if the Senate adopts a law to this effect.
In March, the House of Representatives passed a bill that could force the sale of TikTok, and a Senate vote could come as soon as next week.
In addition to his campaign donations to Republicans, Mr. Yass funded a massive awareness campaign through a libertarian group, the Club for Growth, to prevent TikTok from being banned. The results were mixed, as many representatives supported by the group voted for the ban.
As with many pieces of legislation, former President Donald Trump is a free agent in the bill’s passage. When he was president, he tried to force the sale of TikTok. But he has since changed his mind. He acknowledged meeting Mr Yass briefly, but said they never discussed TikTok.
This article was published in the New York Times.
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reference: www.lapresse.ca