Met with Cybersecurity Authorities Earlier This Year
Demanded Compliance with Data Security Regulations
[Asia Economy Reporter Kwon Jae-hee] It has been revealed that the indefinite postponement of the overseas IPO of ByteDance, the parent company of the Chinese video-sharing platform TikTok, was due to meetings with government officials earlier this year.
According to a report on the 12th (local time) by The Wall Street Journal (WSJ), citing sources, China's cybersecurity regulatory agency demanded that ByteDance focus on data security, leading to ByteDance abandoning its IPO plans. The cybersecurity authorities expressed concerns about ByteDance apps' compliance with data security regulations and closely questioned how data is collected, stored, and managed. Originally, ByteDance founder Zhang Yiming planned to list on the US or Hong Kong stock exchanges in March, but postponed the plan after meetings with the authorities. As of December last year, ByteDance's market value was estimated to reach $180 billion (approximately 206 trillion KRW).
According to sources, Zhang Yiming stated that "now is not the right time for an IPO" due to the political environment.
Recently, the background of ByteDance's IPO postponement has drawn more attention following the backlash against Didi Chuxing, known as the "Chinese Uber," which faced cybersecurity investigations by Chinese authorities after attempting to list on the New York Stock Exchange and was subsequently removed from app markets.
Recently, the Chinese government has been tightening restrictions on overseas listings of domestic IT companies under the so-called "listing approval system." This system mandates that IT companies with over one million users undergo a pre-screening to check for national security threats before listing overseas, which the industry views as effectively a ban on overseas listings. Chinese authorities are concerned that sensitive data could be leaked to countries like the US if domestic IT companies with vast amounts of data list overseas.
However, unlike Didi Chuxing, ByteDance is financially stable and thus has no urgent reason to rush its IPO. According to ByteDance's internal announcement last month regarding last year's performance, revenue was $34.3 billion (approximately 39.4 trillion KRW), and gross profit was $19 billion (approximately 21.8 trillion KRW).
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