By Echo Wang and Yingzhi Yang
(Reuters) – Zhang Yiming will step down as chief executive of TikTok-owner ByteDance, leaving the task of navigating a rising number of Big Tech regulations worldwide to college roommate, long-time colleague and current human resources head Liang Rubo.
In an employee memo on Thursday – first reported by Reuters and later disclosed by the firm – Zhang said the change would “enable me to have greater impact on longer-term initiatives”.
He will move to a “key strategy” position at the end of the year, ByteDance said in a statement.
Zhang, who did not address his role as chairman, in the memo called Liang “an invaluable partner” with “strengths in management, organization, and social engagement”.
ByteDance’s biggest management shake-up since its launch in 2012 comes less than a month after its chief financial officer, Shouzi Chew, became CEO of flagship short-video app TikTok.
It also comes as Chinese regulators increase scrutiny of the country’s biggest technology firms. In April, they slapped e-commerce giant Alibaba (NYSE:) Group Holding Ltd with a $ 2.8 billion fine for anti-competitive practices, and last year suspended fintech affiliate Ant Group’s initial public offering.
Anti-trust regulators have also told Tencent Holdings (OTC:) Ltd they are preparing to fine the gaming giant as much as $ 1.55 billion, Reuters reported that last month.
Zhang, who turned ByteDance into a social media force, in the memo said he was not a social person and lacked the skills of an ideal manager. He also blamed the day-to-day challenges of a CEO as being a hurdle to research and innovation.
“I’m more interested in analyzing organizational and market principles, and leveraging these theories to further reduce management work, rather than actually managing people,” Zhang, 38, wrote in the memo.
“Similarly, I’m not very social, preferring solitary activities like being online, reading, listening to music, and contemplating what may be possible.”
Zhang owns 20% to 30% of ByteDance and holds over 50% of voting rights, people with knowledge of the matter previously told Reuters. ByteDance did not comment on Zhang’s stake.
Zhang in the memo said he will work with Liang over the next six months to ensure a smooth transition. He did not mention whether he would give up his voting rights.
“Based on previous experience it’s likely we could see a slowdown of investment in new businesses, while they could pay more attention to old businesses as the new management team needs some time for adjustment,” said Shawn Yang, managing director of Blue Lotus Capital Advisors.
Liang, not a household name in China, studied and roomed with Zhang at Nankai University in Tianjin, China. He also worked with Zhang at real estate website 99fang.com prior to joining ByteDance. Liang on his LinkedIn profile https://www.linkedin.com/in/rubo-liang-54744824 said he is a ByteDance co-founder.
In an internal memo seen by Reuters, Liang said he looked forward to continuing working with his colleagues, and that the new role represents a “huge challenge” and places “a lot of pressure” on him.
ByteDance, which employs over 100,000 people worldwide, had been preparing for a much-anticipated initial public offering (IPO) this year, but halted plans in April.
“I think it’s possible that Zhang is concerned that after the IPO he would see a ballooning of his wealth and get a lot of attention from the media. It is hard to be a rich person in China. You don’t get as much recognition,” said Beijing-based technology analyst Li Chengdong.
Zhang is the latest in a small group of founders of Chinese tech firms to move away from day-to-day management.
Colin Huang, founder of e-commerce firm Pinduoduo (NASDAQ:) Inc, stepped down as chief executive in 2020 and as chairman in March. The 41-year-old, who owns about 30% of Pinduoduo, will also give up his super voting rights.
Nine-year-old ByteDance’s previous big organizational shake-up occurred last year, when Zhang appointed Chairman Zhang Lidong and Chief Executive Kelly Zhang at ByteDance’s China business.
ByteDance’s TikTok has sought to distance itself from Beijing after the United States raised national security concerns over the safety of the personal data it handles.
Former U.S. president Donald Trump’s administration sought to force ByteDance to divest control of the app. A U.S. plan to sell TikTok’s American operations to a consortium that included Oracle Corp (NYSE:) and Walmart (NYSE:) Inc languished, however, after ByteDance launched successful legal challenges.
This post originally appeared on Stock Market News