The Wall.St Journal 21Feb2020

B4| Friday, February 21, 2020 **** THE WALL STREET JOURNAL.

TECHNOLOGY WSJ.com/Tech

business. According to adver-

tising agencies, ByteDance is

testing a self-service platform

that allows brands and

marketing agencies to buy ads

styled for geography, age range

and interests.

Still, brands find TikTok

confusing at times to navigate,

said Alessandro Bogliari, chief

executive of the Influencer

Marketing Factory, which

works with influencers on Tik-

Tok. Adding e-commerce links

or product descriptions can be

a clunky process, he said. “It’s

still at the beginning of its po-

tential,” Mr. Bogliari said.

Other ByteDance successes

might have a hard time trans-

lating to the U.S.

One fast-growing revenue

source in China comes from

live-streaming online influenc-

ers, who act like hosts of their

own channels on Douyin, the

local version of TikTok. Fans

offer gift payments to their fa-

vorite influencers, and Byte-

Dance takes a cut. Influencers

hawk products during infomer-

cial-like segments.

Last year, spending on

Douyin for such digital gifts hit

nearly $3 billion, from virtually

zero the year before, according

to Blue Lotus, and could nearly

double this year. But that kind

of business has never really

taken off in the U.S., except in

niche areas such as games.

—Liza Lin

contributed to this article.

for TikTok, are teenagers with

limited spending power.

TikTok still has to convince

companies that advertising on

its platform will translate into

sales, advertising executives

said. The app doesn’t have the

stockpile of user data and ana-

lytics offered byFacebookInc.

andAlphabetInc.’s Google, the

executives said, meaning it

can’t offer the same degree of

finely tailored ads to specific

groups. “They haven’t even

figured out advertising,” Mr.

Yang said. “Facebook or Insta-

gram, these platforms have

better advertising performance

than TikTok.”

ByteDance has some trends

in its favor, analysts say. Its

apps already have 700 million

global daily active users, in-

cluding many in the U.S.—a

large base to which it can offer

new products. Tencent has fol-

lowed a similar strategy with

success in China, using WeChat

to provide consumer busi-

nesses such as mobile games

and digital payments.

TikTok offers U.S. advertis-

ers a chance to reach its audi-

ence with tools not available

on other social-media plat-

forms, such as its hashtag

challenges. Brands create a

custom dance or skit, linked to

a hashtag, which is then pro-

moted on the app.

Last year, TikTok hired for-

mer Facebook executive Blake

Chandlee to lead its U.S. ad

ent. ByteDance has said it isn’t

ordered by Beijing to censor.

ByteDance generated at

least $7.4 billion in revenue in

2018, The Wall Street Journal

has reported, mainly from ad-

vertising in China. Last year,

revenue climbed to about $11.5

billion or more, according to

estimates from Shawn Yang,

managing director of Blue Lo-

tus Capital Advisors.

But ByteDance isn’t consis-

tently profitable, the Journal

has reported, leading some ob-

servers to question the com-

pany’s $75 billion valuation in

the private market. Many of

ByteDance’s users, especially

pay, as well asSpotify Tech-

nologySA and other Western

companies. Duoshan, a video-

based messaging app that

ByteDance designed to com-

pete with the WeChat messag-

ing service in China, flopped

after its rollout.

ByteDance also faces politi-

cal risk in the U.S., where regu-

lators are reviewing TikTok to

determine whether its China

links make it a national-secu-

rity problem. Some advertisers

are wary of spending too much

money on the app, analysts

say, because of concerns about

harmful content and possible

censorship by its Beijing par-

There is no guarantee Byte-
Dance’s efforts will succeed.
Many of its projects are at-
tempting to break into sectors
with existing heavyweights, in-
cluding Tencent Holdings
Ltd.’s WeChat Pay andAnt Fi-
nancial Services Group’s Ali-

Continued from page B1

TikTok’s

Owner

Diversifies

data from their bank, mutual-

fund and brokerage accounts

and how much information

those apps can grab. When a

customer links a new app to

their bank or brokerage ac-

count, instead of giving it

their username and password

they are sent a dashboard that

governs access through their

financial firm.

Customers can later use

that dashboard to limit or re-

voke apps’ access to their ac-

count data.

The platform aims to put an

end to “screen scraping,” the

process where the app com-

pany’s software obtains the

customer’s sign-in informa-

tion, logs in as that individual

and extracts their data. Many

banks have grown uncomfort-

able with this approach, in

which apps essentially imper-

sonate their customers, said

Peter Wannemacher, principal

analyst at Forrester Research

Inc.

Akoya executives say finan-

cial firms will pay for the plat-

form so they don’t have to

build one themselves or nego-

tiate data-sharing agreements

with each of the apps its cli-

ents want to use.

“It’s a two-sided network,”

said Stuart Rubinstein,

Akoya’s chief executive.

To be effective, though,

Akoya needs many partici-

pants to plug into its network.

By separating from FMR,

Akoya seeks to address any

discomfort other institutions

might have with a platform

housed inside a fellow finan-

cial-services heavyweight. Fi-

delity has more than 30 mil-

lion customers and $8.3

trillion in assets under admin-

istration. By bringing in many

of the biggest banks as inves-

tors, Akoya believes it has

locked up enough users on one

side of the network to lure app

developers on the other.

“When we envisioned build-

ing a utility, we realized we

might need to spin it out,” Mr.

Rubinstein said.

Akoya’s success will hinge

on whether it emerges as a

primary network for sharing

financial data, Mr. Wan-

nemacher said. Other early-

stage startups are pursuing a

similar idea, he said, and some

banks may offer similar ser-

vices themselves.

Akoya executives said their

discussions with banks and

other financial firms led them

toClearing House Payments

Co., whose network settles

trillions of dollars in elec-

tronic payments. Clearing

House, which had been devel-

oping its own data-manage-

ment platform, signed on as

an investor along with 11 of its

member banks.

In addition to JPMorgan,

Bank of America and Wells

Fargo,Capital One Financial

Corp., Citigroup Inc., Hunting-

ton Bancshares, KeyCorp, PNC

Financial Services Group Inc.,

TD Bank NA, Truist Financial

Corp. and U.S. Bancorp have

also invested. FMR kept a

stake for itself.

Mr. Rubinstein declined to

say how much each bank put

into the startup, or what those

investments meant for Akoya’s

valuation.

The company hasn’t yet

started to bring in revenue,

and so far only Fidelity has

plugged into the Akoya plat-

form.

Based in Boston, Akoya has

fewer than 50 employees.

Fidelity Investments’ parent
company is spinning out its
software startup that gives
consumers more control over
how their bank-account infor-
mation is shared with tax,
budget and other online finan-
cial applications.
FMR LLC founded the
startup, a wholly owned unit
of the firm called Akoya, two
years ago. But in a bid to help
jump-start the use of Akoya’s
platform, FMR sold stakes in
the company to a dozen other
financial firms. Among those
new investors are many of the
banks FMR hopes will be
Akoya customers, including
JPMorgan Chase&Co.,Bank
of AmericaCorp. and Wells
Fargo & Co. Financial terms
weren’t disclosed.
Akoya expects its platform
to go live with customers
other than Fidelity later this
year, the company said. It sits
between the financial-services
firms that manage consumers’
accounts and the many apps
that aggregate information to
help clients manage their per-
sonal finances.
Akoya lets customers
choose which apps can access

BYJUSTINBAER

FMR to Spin Out Data Startup

Fidelity parent hopes

to accelerate use of its

platform for sharing

account information

FMR believes financial-services companies will pay to use Akoya rather than build platforms.

CHARLES KRUPA/ASSOCIATED PRESS

gether into new geographies

and offerings and that the

combined company plans to

add over 3,000 employees in

the next three years.

The merged company’s size

and growth profile make it a

candidate for an initial public

offering down the road.

With offices in San Fran-

cisco, New York and London,

Hellman & Friedman has a

strategy of making large-scale,

concentrated bets on a rela-

tively small set of companies in

areas in which it has expertise.

It has a long history of invest-

ing in software-related busi-

nesses, including DoubleClick

Inc., which it sold to Google in

2008, and Nasdaq Stock Market

LLC, which it exited in 2007.

Kronos has been a success-

ful investment for Hellman &

Friedman, delivering returns of

13 times over the 13 years it

has been in the firm’s portfolio,

according to David Tunnell, a

partner at the buyout firm who

leads its software investments.

“This is an example of how

we try to offer long-term sup-

port to high-quality growth

companies,” Mr. Tunnell said

in an interview.

For Blackstone, the invest-

ment in Ultimate was part of

its recent focus on putting

money into fast-growing com-

panies—a strategy that the pri-

vate-equity giant’s President

Jonathan Gray has embraced as

a way to navigate an expensive

market. Other recent so-called

growth investments include

Blackstone’s 2019 deals for a

majority stake in MagicLab,

which owns dating app Bum-

ble, and mobile performance

marketing platform Vungle.

Continued from page B1

Workplace

Software

Merger Set

New Mexico suedAlphabet

Inc.’s Google, alleging that the

internet giant knowingly spies

on students and their families

through its Google Education

platform.

The state says Google has

used the platform to circumvent

privacy laws and gain access to

children’s personal data and

movements online, according to

a complaint filed Thursday in

federal court in Albuquerque.

According to the lawsuit,

Google collected troves of per-

sonal information including

students’ physical locations,

visits to websites, internet

searches, videos viewed on

YouTube, contact lists, voice

recordings and saved pass-

words, among other details.

“These claims are factually

wrong,” Google spokesman Jose

Castaneda said in an emailed

statement. “G Suite for Educa-

tion allows schools to control

account access and requires

that schools obtain parental

consent when necessary. We do

not use personal information

from users in primary and sec-

ondary schools to target ads.”

The lawsuit is the latest chal-

lenge to Google’s data-collection

practices amid broader criticism

by lawmakers, regulators and

others of the company’s efforts

to protect user privacy. Federal

law prohibits companies from

collecting data on children un-

der 13 without parental consent.

Google has captured about

60% of the school device mar-

ket, according to Futuresource

Consulting, by distributing its

low-cost Chromebooks. The

budget laptops are a gateway to

a Google world: They house its

education platform, run on its

Chrome operating system, and

are loaded with the Chrome web

browser. The laptops introduce

students to the company’s prod-

ucts starting as early as kinder-

garten. The Google Education

platform is a suite of free tools

for schools that include email,

cloud storage and calendars.

The lawsuit alleges that

while Google has positioned

its education platform “as a

benign tool that is an answer

to resource-deprived schools

nationwide,” the company se-

cretly uses it to monitor chil-

dren’s online activity even at

home and on personal devices.

BYYOREEKOH

Google Is

Sued Over

Children’s

Data

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