Beijing-based ByteDance, parent company of social video app TikTok, which was valued at $180 billion in December, indefinitely put plans on hold for a public offering. The company had been considering an IPO in the United States or Hong Kong but its founder and CEO Zhang Yiming changed his mind after meeting with China’s cyberspace and security regulators who reportedly told him to focus on data-security risks and other issues. Another reason for holding off is that the company did not have a chief financial officer at the time.
The Wall Street Journal reports that, “ByteDance’s cautious approach contrasts with that of Chinese ride-hailing giant DiDi Global … [which] pressed ahead with listing plans in the U.S. despite suggestions from the cyberspace administration not to amid concerns that some of its data could fall into foreign hands.” DiDi, which raised $44 billion in June, “is now the subject of a cybersecurity investigation and has since had its main app and 25 others it operates ordered removed from Chinese app stores.”
Regulators did not overtly call for ByteDance to delay its IPO but, instead, “were concerned about the data-security compliance of [the company’s] apps in China,” said one source. They quizzed ByteDance on how it “collected, stored and managed data.”
In addition to TikTok, ByteDance’s app include domestic short video app Douyin and Jinri Toutiao (“Today’s Headlines”). Douyin collects an array of personal information that “can include mobile-phone numbers, birthdays, real names and ID numbers.” Zhang “assessed that the time wasn’t right for an IPO because of the political and regulatory environment” and on April 23 announced that the company currently had no plan for an IPO.
In June, ByteDance “told employees … that its revenue last year more than doubled to $34.3 billion as advertising on its platforms grew, while gross profit rose to $19 billion.” ByteDance joke app Neihan Duanzi had previously been shut down by Chinese authorities in early 2018 “on the grounds that it contained vulgar content.” This year, authorities again chastised the company for “excessive collection of users’ personal information and unsuitable content.”
CNBC reports that, “ByteDance hired Shou Zi Chew, a former executive at Chinese smartphone maker Xiaomi, as its CFO in March, fueling speculation about a potential IPO.” Chew was named TikTok CEO in May.
Biden Administration Asks Courts to Dismiss Government Appeals of TikTok Ruling, Reuters, 7/12/21
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China’s Great Firewall Is Blocking Around 311K Domains, 41K by Accident, The Record, 7/11/21
Didi Warns of ‘Adverse Impact’ After 25 Mobile Apps Removed, Bloomberg, 7/12/21