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07.12.21

Data security concerns hinders IPO market for Chinese companies

BY Andrew L. Share

The Wall Street Journal reports today that ByteDance, the Chinese company that owns TikTok, had put its IPO plans on hold earlier in the year due to warnings from Chinese regulators concerning data security risks. According to the WSJ, ByteDance's decision was made, in part, due to recommendations from the Chinese cyberspace and securities regulators to focus on addressing data-security risks before listing offshore.

According to the WSJ, ByteDance is one of a handful of internet companies asked by Chinese authorities to conform to strict data regulation practices. As a result, observers speculate there will be a continued and heightened focus on IT firms that express an interest in listing in the U.S. and other foreign markets.

Whether this results in a crackdown on influential Chinese companies remains to be seen. Still, it is becoming apparent that strict compliance with increasingly rigorous data-security requirements can have a chilling effect on not just a company's operations but the public markets as well.

Nixon Peabody’s Cybersecurity and Privacy Team will continue to monitor developments.

Tags: China, , Privacy

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