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Experts say one of China's most popular apps can spy on its users
03:32 - Source: CNN
CNN  — 

It is one of China’s most popular shopping apps, selling clothing, groceries and just about everything else under the sun to more than 750 million users a month.

But according to cybersecurity researchers, it can also bypass users’ cell phone security to monitor activities on other apps, check notifications, read private messages and change settings.

And once installed, it’s tough to remove.

While many apps collect vast troves of user data, sometimes without explicit consent, experts say e-commerce giant Pinduoduo has taken violations of privacy and data security to the next level.

In a detailed investigation, CNN spoke to half a dozen cybersecurity teams from Asia, Europe and the United States — as well as multiple former and current Pinduoduo employees — after receiving a tipoff.

Multiple experts identified the presence of malware on the Pinduoduo app that exploited vulnerabilities in Android operating systems. Company insiders said the exploits were utilized to spy on users and competitors, allegedly to boost sales.

“We haven’t seen a mainstream app like this trying to escalate their privileges to gain access to things that they’re not supposed to gain access to,” said Mikko Hyppönen, chief research officer at WithSecure, a Finnish cybersecurity firm.

“This is highly unusual, and it is pretty damning for Pinduoduo.”

Malware, short for malicious software, refers to any software developed to steal data or interfere with computer systems and mobile devices.

Evidence of sophisticated malware in the Pinduoduo app comes amid intense scrutiny of Chinese-developed apps like TikTok over concerns about data security.

Some American lawmakers are pushing for a national ban on the popular short-video app, whose CEO Shou Chew was grilled by Congress for five hours last week about its relations with the Chinese government.

The revelations are also likely to draw more attention to Pinduoduo’s international sister app, Temu, which is topping US download charts and fast expanding in other Western markets. Both are owned by Nasdaq-listed PDD, a multinational company with roots in China.

While Temu has not been implicated, Pinduoduo’s alleged actions risk casting a shadow over its sister app’s global expansion.

There is no evidence that Pinduoduo has handed data to the Chinese government. But as Beijing enjoys significant leverage over businesses under its jurisdiction, there are concerns from US lawmakers that any company operating in China could be forced to cooperate with a broad range of security activities.

Pinduoduo's parent company PDD is listed on the Nasdaq in New York.

The findings follow Google’s suspension of Pinduoduo from its Play Store in March, citing malware identified in versions of the app.

An ensuing report from Bloomberg said a Russian cybersecurity firm had also identified potential malware in the app.

Pinduoduo has previously rejected “the speculation and accusation that Pinduoduo app is malicious.”

CNN has contacted PDD multiple times over email and phone for comment, but has not received a response.

Rise to success

Pinduoduo, which boasts a user base that accounts for three quarters of China’s online population and a market value three times that of eBay (EBAY), wasn’t always an online shopping behemoth.

Founded in 2015 in Shanghai by Colin Huang, a former Google employee, the startup was fighting to establish itself in a market long dominated by e-commerce stalwarts Alibaba (BABA) and JD.com (JD).

It succeeded by offering steep discounts on friends-and-family group buying orders and focusing on lower-income rural areas.

Pinduoduo posted triple digit growth in monthly users until the end of 2018, the year it listed in New York. By the middle of 2020, though, the increase in monthly users had slowed to around 50% and would continue to decline, according to its earnings reports.

Colin Huang, a former Google employee, founded Pinduoduo in 2015 in Shanghai. He  stepped down as CEO in 2020 and resigned as chairman the following year.

It was in 2020, according to a current Pinduoduo employee, that the company set up a team of about 100 engineers and product managers to dig for vulnerabilities in Android phones, develop ways to exploit them — and turn that into profit.

According to the source, who requested anonymity for fear of reprisals, the company only targeted users in rural areas and smaller towns initially, while avoiding users in megacities such as Beijing and Shanghai.

“The goal was to reduce the risk of being exposed,” they said.

By collecting expansive data on user activities, the company was able to create a comprehensive portrait of users’ habits, interests and preferences, according to the source.

This allowed it to improve its machine learning model to offer more personalized push notifications and ads, attracting users to open the app and place orders, they said.

The team was disbanded in early March, the source added, after questions about their activities came to light.

PDD didn’t reply to CNN’s repeated requests for comment on the team.

What experts found

Approached by CNN, researchers from Tel Aviv-based cyber firm Check Point Research, Delaware-based app security startup Oversecured and Hyppönen’s WithSecure conducted independent analysis of the 6.49.0 version of the app, released on Chinese app stores in late February.

Google Play is not available in China, and Android users in the country download their apps from local stores. In March, when Google suspended Pinduoduo, it said it had found malware in off-Play versions of the app.

The researchers found code designed to achieve “privilege escalation”: a type of cyberattack that exploits a vulnerable operating system to gain a higher level of access to data than it’s supposed to have, according to experts.

“Our team has reverse engineered that code and we can confirm that it tries to escalate rights, tries to gain access to things normal apps wouldn’t be able to do on Android phones,” said Hyppönen.

In China, about three quarters of smartphone users are on the Android system.