ByteDance, which also owns TikTok, had received a round of funding in December 2020 which had taken its valuation to a whopping $180 billion. The WSJ report said the company was planning an IPO for a part or the entirety of its businesses in the US or Hong Kong.
However, the plans were delayed in March after the company was asked to look into matters pertaining to risks involving data security and others, the WSJ report added.
The move followed a series of meetings between ByteDance’s founder Zhang Yiming and the country’s cyberspace regulator.
Another person aware of the happenings told WSJ that the company didn’t have a Chief Financial Officer at the time, owing to which the plans of going public were put on hold.
Over the past few months, the Chinese authorities have gone tough on tech companies with new rules that govern data collection and cybersecurity along with a crackdown on antimonopoly activities.
These tightening of laws have also impacted other companies like Meituan and Alibaba. China fears that a company’s data might get compromised if it lists on an US exchange owing the disclosures associated with the listing process.
There have also been crackdowns on improper data collection and the use of data for the protection of the rights of the consumers.
The Chinese securities regulator is currently drafting rules that could possibly ask companies registered offshore to apply for regulatory approval prior to selling shares in foreign markets. On the other hand, the country’s cyberspace regulator said it is looking to amend the cybersecurity laws that will make it compulsory for tech companies to undergo a cybersecurity review if they have over a million users.
The WSJ report said that owing to the rising tensions between the USA and China, the Chinese administration began asking some tech firms to disclose their plans of possibly listing overseas along with seeking informal approval.
As per sources, Chinese regulators have never directly called for a delay in ByteDance’s IPO, but are deeply concerned about matters relating to the compliance of data security rules.
The regulators in the meetings with the company showed eagerness and tried to know more about how data is collected, stored and then shared by the Co. This is when the founder assessed the situation and arrived at the conclusion that the time is not right for an IPO.