A legal battle over the founding of TikTok is playing out in a Norristown courtroom

A trial that will determine whether Republican Party megadonor Jeff Yass’ investment firm owes millions to early investors in a company whose technology, they allege, would eventually help launch TikTok is underway in Norristown.

In the mid-2000s, Susquehanna International Group — Yass’ Bala Cynwyd-based trading firm — was wading into the Chinese market. TikTok’s parent company, ByteDance, was still years away from becoming a worldwide sensation worth billions of dollars.

But a civil complaint filed in Montgomery County Court by two former China-based Susquehanna contractors say Yass’ firm saw the value in a cutting-edge internet search business the two plaintiffs helped discover.

And those men allege Susquehanna quietly developed that company’s technology into what would become ByteDance without their knowledge, cutting them out of a profit-sharing agreement.

Lawyers for Susquehanna strongly rebutted that suggestion, calling the suit a “money grab” based on tenuous connections and a desire for a “shot” at the firm’s reported $15 billion stake in TikTok’s parent company. Yass is not named as a defendant.

The case has brought all the pomp of a high-powered corporate slugging match to a cramped Norristown courtroom, where Manhattan-based lawyers for both parties made opening statements Tuesday before a jury and Judge Steven C. Tolliver in what is expected to be a complex, winding dispute.

It also casts light on a smattering of internal emails and documents that offer a glimpse into Susquehanna’s involvement with ByteDance long before TikTok’s rise to seeming ubiquity.

Yass was not in attendance as proceedings got underway; Arthur Dantchik, his longtime business partner and Susquehanna cofounder, sat in for the opening session Tuesday.

Here’s what to know about the trial so far.

In 2006, plaintiffs Peter Tan and Zhang Hao were contractors hired to help Susquehanna find and invest in budding Chinese companies.

One of those companies, a search engine called Kuxun, showed promise, and Susquehanna purchased a minority stake in the company.

According to Jacob Buchdahl, lead attorney for Tan and Zhang, the powerful search technology that allowed Kuxun users to scour the internet and compare prices for things like train tickets and real estate listings is the same technology that would eventually evolve into ByteDance’s vaunted algorithm, feeding users news and entertainment based on their interests and behavior.

According to Tan and Zhang’s profit-sharing agreement with Susquehanna, the men were guaranteed a small percentage of value in companies they helped procure for the firm.

But in Buchdahl’s telling, Susquehanna “had a few tricks up their sleeve” when it sold most of Kuxun to the travel company Expedia in 2009 and told Tan and Zhao that the company was “liquidated,” all while “carving out” Kuxun’s real estate section — and its high-powered search technology — to remain under their control.

The plaintiffs consider that technology “valuable intellectual property.” Their complaint cites a section of their contract that says that if Susquehanna disposes of an investment but retains some sort of value, then contractors, too, maintain interest in the profits.

Buchdahl proceeded to outline what the plaintiffs see as a continuous link between Kuxun and ByteDance.

They allege that Susquehanna used Kuxun’s search functionality to launch 99Fang, a short-lived internet housing company headed by Zhang Yiming, an engineer involved with Kuxun’s success (documents that were briefly unsealed last year and reviewed by the New York Times show that Susquehanna’s China arm went as far as handpicking Zhang for the new venture).

And in 2011, when Zhang Yiming told Susquehanna that he wanted to enter the burgeoning world of mobile apps, he approached higher-ups with a different kind of company that also relied on Kuxun’s search technology, Buchdahl alleged — ByteDance.

Susquehanna invested a little over $2 million in the idea. This year, some market forecasters valued ByteDance at $400 billion.

In the plaintiffs’ view, there are few differences between Susquehanna’s involvement with the Kuxun real estate section, 99Fang, and ByteDance.

“[Susquehanna] hid this from our clients so they didn’t have to share profits from ByteDance,” Buchdahl told the jury.

Susquehanna attorney Scott Edelman told the jury Tuesday that Tan and Zhang Hao’s attorneys were “trying to get you to rewrite their contracts” to include the ByteDance investment, one that occurred years after the men severed ties with Yass’ firm.

Contractors who help Susquehanna invest abroad are grouped into funding “pools,” Edelman said, each spanning three years and allowing for profit-sharing deals if the firms’ investment falls within that period.

Tan and Zhang’s pool covered investments made in 2006, 2007, and 2008, according to Edelman. Susquehanna’s ByteDance investment came in 2012.

While Edelman conceded that there were “connections and similarities” between Kuxun, 99Fang, and ByteDance, he disputed that the open-source search technology powering the three companies was identical.

Tan and Zhang Hao’s contracts don’t account for “profits from connections,” Edelman said.

Addressing Tan and Zhang Hao’s claim that Susquehanna helped carry Kuxun’s unique search functionality across companies, eventually landing a winner with ByteDance, Edelman downplayed the complexity of the company’s early TikTok predecessors — including an app called Pretty Babes that served users photos of attractive women.

The search function was not “wildly complicated,” Edelman said.

“Everybody can get a stream of similar pictures by doing a search in Google Images,” he told the jury.

And in response to the plaintiff’s allegation that Susquehanna had quietly spun off a portion of Kuxun for itself, Edelman contended that Yass’ firm had instead “worked out a deal” to take on a company that Expedia ultimately didn’t want.

He called that agreement a “purchase,” saying Susquehanna offered Expedia six months of consulting services in exchange for Kuxun’s real estate section.

Attorneys for Tan and Zhang Hao spent much of Wednesday eliciting expert testimony from their first witness, Edmund Yeh, a professor of electrical and computer engineering at Northeastern University.

Yeh testified to the cutting-edge element of the “vertical search” technology developed in the early days of Kuxun that, in his view, was later used by 99Fang and ByteDance. The machine-learning functionality allows for far deeper and more specific web crawling than a Google search, according to Yeh.

He called 99Fang’s functionality an “improvement” on Kuxun’s technology for the mobile-phone era. A similar search function also appeared in Toutiao, one of ByteDance’s early apps, he said.

“All three companies were based on the same vertical search platform,” Yeh testified.

Yeh later drew attention to the nine-day period in 2012 in which engineer Zhang Yiming, formerly of Kuxun and 99Fang, launched ByteDance.

“It is simply not possible” to launch a company that quickly unless it relied on back-end technology that was in “many years of development,” Yeh said.

In turn, Susquehanna’s defense team contended that Yeh’s testimony relied on “hearsay” investment memos and said the professor himself had never developed a social media app.

The firm’s lawyers have begun to tease a variety of additional defenses.

Those include that Tan and Zhang Hao were in fact paid — in salaries and discretionary bonuses — for their work in 2006. Edelman later went as far as alleging that the plaintiffs did not have as large of a role in finding Kuxun as they suggested, and disputed whether the civil suit fell within the statute of limitations.

The attorney also implored that the jury begin considering whether the technical know-how that engineer Zhang Yiming possessed during his time with Kuxun, 99Fang, and ByteDance should be considered property.