In a wide-ranging Q&A with The Recorder, Pillsbury’s China practice leader and Silicon Valley Capital Markets partner Tom Shoesmith discussed the increasing pressure a Chinese gaming company is facing from the Committee on Foreign Investment in the U.S. on its cross-border deal to acquire the gay dating app Grindr.

The Chinese company, Beijing Kunlun Tech Co. Ltd., recently reported that it had not reached an agreement with CFIUS regarding its stake in Grindr, despite previous reports of the mounting pressure on the Beijing-based company.

CFIUS, the nine-member federal panel that reviews acquisitions of U.S.-based companies by foreign firms, had previously pressured Kunlun to sell Grindr, claiming that Kunlun’s ownership of the app constitutes a threat to U.S. national security. Grindr, which has more than 27 million users, collects personal data such as location, photos and even HIV status. The U.S. government is reportedly concerned that foreign governments might use such data as a means of influence or blackmail.

“It is not the first time that [CFIUS] has asked a foreign company to divest or sell its stake after the deal is closed, although it is somewhat unusual,” Shoesmith told The Recorder. “CFIUS watches Chinese investments, the government watches Chinese investment, whether there has been a filing been made or not. And in this case, there must have been knowledge in that market that Grindr, owned by Kunlun, was considering an IPO. CFIUS took notice, must have decided CFIUS was uncomfortable with the Chinese control of Grindr because of the so-called personal identifying information or PII issue.”

Shoesmith added: “The PII issue is sort of a well-known red flag for CFIUS. There have been a number of cases where PII concerns probably were the reason why deals were not approved by CFIUS.”

In his answer to a question about whether more Chinese deals are being blocked under the Trump administration, Shoesmith said, “We have assembled a database of all the China-related deals that we can find, going all the way back to 2014—so the last part of the Obama years—and the first two years of the Trump administration. And here is the conclusion: Chinese deals have a lower pass rate under Trump than they did under Obama—some, but not a huge amount.”

“The pass rate under Obama was about 95 percent, which is pretty high. Under Trump, the percentage is 60 percent,” Shoesmith continued. “So, it is bad, but it is not hopeless, if you look at the deals, there are only 44 of them... If you don’t try to do a deal that is obviously problematic … if you take those out, you get a pass rate of three out of four. So, it is not terrible, but it is difficult.”