It was revealed that there was an interview with government officials earlier this year behind the indefinite postponement of the IPO of China’s video-sharing platform TikTok’s parent company ByteDance.
According to a report by the Wall Street Journal (WSJ) citing sources on the 12th (local time), it has been confirmed that ByteDance gave up on IPO as Chinese cybersecurity regulators demanded ByteDance to focus on data security. Cyber security authorities are known to have intensively questioned how to collect, store and manage data while worrying about compliance with data security regulations of byte dance apps. Originally, the founder of ByteDance, Zhang Ming, was scheduled to be listed on the U.S. or Hong Kong stock markets in March, but postponed the plan after a meeting with authorities. Byte Dance was estimated to be worth $180 billion as of December last year.
According to sources, Zhang Ming reportedly said, “Now is not the right time to make an IPO,” citing the political environment.
Recently, Didi Chuxing, a car-sharing service called the Chinese version of Uber, pushed for the listing of the New York Stock Exchange. Amid the aftermath of being kicked out of the app market after being investigated by the Chinese authorities for cybersecurity, it is drawing more attention as the background of Byte Dance’s postponement of IPO has been revealed belatedly.
In recent years, the Chinese government has further clamped down on overseas listing of its IT companies in the name of a “listing permit system.” The listing permit system obliges IT companies with more than 1 million users to undergo preliminary screening to see if there are any national security threats to be listed on overseas stock markets, which is virtually tantamount to a ban on listing overseas. Chinese authorities are concerned that sensitive data will be leaked to the U.S. and other countries if their IT companies with vast amounts of data are listed on overseas stock markets.
However, some analysts say that there is no reason to rush the IPO because Byte Dance is financially stable unlike Didi Chuxing. According to last year’s performance announced by ByteDance inside the company last month, sales were $34.3 billion (about KRW 39.4 trillion) and gross profit was $ 19 billion (about KRW 21.8 trillion).
