Asian Tech Press -- A Beijing-based state-owned firm, which takes a 1% stake in ByteDance's key China entity, is rumored to have a board seat in the entity.

Beijing ByteDance Technology Co., a key subsidiary of TikTok's parent company ByteDance, has sold a 1% stake in a deal in April to WangTouZhongWen (Beijing) Technology Co., which is owned by three state-owned entities, making the latter the subsidiary's second-largest shareholder, according to Tianyancha, an online platform providing Chinese enterprise information.

The deal allow the state-owned firm to appoint a board director at Beijing ByteDance, The information said on Monday, citing two people familiar with the matter.

As the main operating body of the short-video app Douyin, TikTok's Chinese version, is a wholly owned subsidiary of Beijing ByteDance Technology, the deal, to some extent, allows the state-owned firm to gain a small amount of control over Douyin.

Industry sources believe that this move by the state-owned enterprise to acquire shares is clearly related to China's increased regulation of Internet companies. It also fuels concerns that the trust of overseas TikTok users will be affected due to the Chinese government's capital participation.

The Chinese subsidiary mentioned in the report is only related to some of its video and information platforms in the Chinese market, according to ByteDance's response to Reuters. That is to say, ByteDance believed that this change has nothing to do with TikTok, which operates overseas, and will not have any impact on it.