ByteDance, the Chinese owner of viral video app TikTok has put plans for an IPO on ice indefinitely in response to Beijing authorities stepping up their scrutiny of digital platforms operating in the country. A number of big technology companies are currently under “supersurveilance” from Chinese regulators. ByteDance has, reports The Wall Street Journal, already been instructed to eliminate perceived risks in its data security.
Somewhat ironically, TikTok’s success in the USA, where it has around 80 million active users, has been the source of trade tensions between the administrations of the two economic superpowers, especially under former U.S. president Donald Trump. Trump threatened to shut TikTok down unless its U.S. operations were sold to a domestic company over data security fears.
The main concern raised by the Trump administration was that as a Chinese-owned company, Bytedance could be obliged by Beijing to pass over sensitive user data that could be exploited. Bytedance strenuously refuted the risk, insisting that it would not do so even if asked to by Chinese authorities. That may well have contributed to increased levels of scrutiny from Beijing since.
Another Chinese technology company, ride-hailing group Didi Global, recently listed in the USA and was targeted by Beijing authorities within days. An investigation has been launched into how Didi handles customer data and has pulled its app from domestic app stores until proceedings have been completed. The company has seen its share price drop by around a third as a result, losing 7.2% yesterday.
ByteDance has been understandably quick to deny it has frozen IPO plans as a result of domestic regulatory scrutiny. A spokeswoman commented the company had already publicly stated in April it had no immediate plans for an offshore listing and declined to respond to “rumours and speculation” on the topic.
Established in 2012, ByteDance also owns the Indian social network Helo and Lark, a messaging service popular in Japan and Singapore. TikTok is, however, undoubtedly the jewel in the crown. The short video platform has over 100 million users across the USA and UK and is especially popular across younger demographics.
It has been reported that ByteDance told staff its revenues had risen by 111% last year to £34.4 billion thanks to an leap in advertising sales.
It has been speculated that the pressure being applied to China’s largest technology companies is indicative of a campaign being waged by the upper echelons of the country’s authorities, who are wary of them gaining too much influence. And that the handling of customer data, also a point of contention and criticism for major western digital platforms, is a convenient excuse.
The Chinese government has also revealed plans to tighten rules around domestic companies having overseas listings. Investors have reacted nervously with dozens of Chinese companies listed in New York seeing their share prices hit. Alibaba has seen its value drop by over 10% in just over a week.
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