The Big Story

TikTok on the IPO clock

Things just never seem to get less complicated for ByteDance, do they? Zhang Yiming and his team barely got to take a deep breath after months of threats from the Trump White House before it had to figure out how to avoid the ire of the Chinese government.

ByteDance scuttled its IPO plans earlier this year, The Wall Street Journal reported, after Beijing regulators urged the company to look into its data security.

• Zhang decided to drop the IPO in March, according to the report. And per the WSJ, it wasn't just because of the regulatory issues; ByteDance also didn't have a CFO, though Shou Zi Chew is now in that role (as well as running TikTok.)
• It was shaping up to be a blockbuster IPO, too, with ByteDance valued at $180 billion after a huge recent funding round.
• But it was probably the right call. DiDi ignored similar warnings, went public and has now faced extremely public bans and investigations.
• "There is a continuing sense of uncertainty and risk," former TikTok CEO Kevin Mayer said on CNBC yesterday. "It does create difficulty, and it creates higher expectations for what you can achieve."

Others are following ByteDance's lead, too. Ximalaya, Keep, LinkDoc and others have all reportedly delayed or canceled planned IPOs. And don't forget about Ant Group, which had its own IPO put on ice indefinitely.

But there's an odd dichotomy here. The U.S. IPO market is absurdly hot, and companies are rushing to go public in practically any way they can because money's free and stocks only go up. (Or so it seems!) But in China, where there are so many huge private companies that investors are scrambling to get a piece of, a chill has come over the market.

• As we've discussed here before, there's both an international story here and an intra-national one.
• China continues to take a sharper look at its biggest tech companies, and those tech companies continue to shy away from the spotlight. (Around the time of the IPO decision, Zhang also stepped down as ByteDance's CEO and named Liang Rubo as his successor.)
• But there's also the question of Chinese companies going public on international markets. That comes with all kinds of data-sharing questions, accounting issues and a total lack of visibility into how things really work, as Protocol's Tomio Geron and Shen Lu recently reported.

And China's not just making one-off decisions, either. The Cyberspace Administration of China has been tightening its rules and upping its enforcement across the board. Most recently, it's pushing for a rule that would require any internet company with more than a million users to get a cybersecurity review before going public abroad. That would cover … a lot of companies.

• The government is concerned about users' personal data, but also national security. Corporate cybersecurity reviews would specifically focus on information that could be "influenced, controlled or maliciously used" by foreign governments. (Here's an explainer on the purpose of the new rules, from a Chinese Communist Party-affiliated newspaper.)

Privacy, user data, national security, malicious foreign governments: It's not all that different from what the White House says it's worried about. In 2021, everybody's a security risk.

— David Pierce (email | twitter)

A MESSAGE FROM ANT GROUP

In 2020, U.S. merchants sold over $54 billion worth of products to Chinese customers on Alibaba's e-commerce platforms, which rely on Alipay to facilitate the transactions. The year prior to the pandemic, Chinese tourists in the U.S. engaged in 800,000 transactions using the Alipay App, for sales valued at $232 million.

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Join Protocol's David Pierce for a conversation with Smart Columbus' Jordan Davis, Sidewalk Infrastructure Partners (SIP)'s Jonathan Winer and Microsoft's Jeremy Goldberg on what it takes to build smart cities right. July 13 @ 11 a.m. PT / 2 p.m. ET Learn more

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People Are Talking

Elizabeth Warren wants lawmakers to investigate Amazon's mask sales:

• "I am concerned that Amazon's policies and procedures appear to be increasing risks for many individuals that are purchasing COVID-19 masks and other protective gear to protect themselves and their communities."

Sundar Pichai thinks AI is one of humanity's greatest feats:

• "I view it as the most profound technology that humanity will ever develop and work on. You know, if you think about fire or electricity or the internet, it's like that. But I think even more profound."

Elon Musk told attorney Randy Baron that the lawyer is a "bad person" during the Tesla CEO's SolarCity testimony:

• "You were mentored by criminals. Then you continued to be mentored by criminals and that is why I do not respect you."

Some Google employees think the company is too big to handle. Here's what one anonymous senior employee said:

• "I'm of the opinion it would be better for everyone at the company — and, frankly, humanity — if Google were broken up."

The Unite union is accusing Amazon of "price gouging" during the height of the pandemic:

• "The fact is that sellers sold their products to customers at massively inflated prices and were only able to do so because of Amazon's online platform, systems, sales and logistics."

Making Moves

On Protocol: Microsoft is buying RiskIQ. The deal is Microsoft's latest move to beef up security as companies continue to face cyberattacks.

Twitter reopened two offices. Employees can head back to New York and San Francisco offices if they want.

Kirstine Stewart is Pex's first chief revenue officer. Stewart served as Twitter's vice president of media up until 2016, and she most recently led new media at the World Economic Forum.

Don McGuire is Qualcomm's next senior VP and CMO. He's been with the company since 2016, and his predecessor will stick around until she retires later this year.

Facebook tapped Manar Waheed to lead its civil rights law unit. She previously served as a counsel for the ACLU and worked on immigration policy under Obama.

On Protocol: Blake Masters wants to be an Arizona senator. The venture capitalist is getting support from Peter Thiel, who donated millions to his campaign.

Tesco's Eve Henrikson will lead Uber's delivery service in Europe. Before Tesco, she worked on ecommerce at Ted Baker.

Ian Plunkett is taking over global policy communications at Coinbase. Previously he held the same role at Twitter.

In Other News

• The Internet Association is crumbling. Former employees, tech company workers and congressional staff told POLITICO that internal turmoil ripped the group apart, sending many employees to companies like Amazon and Facebook.
• The Football Association urged social media companies to "step up" following the online harassment of three Black soccer players. The FA also called on the government to criminalize online hate "so that this abuse has real life consequences."
• Ransomwhere? Cybersecurity expert Jack Cable launched a website that will keep track of ransomware payments using an open database.
• On Protocol | Workplace: WFH isn't helping the environment. Experts found that working remotely has shifted energy usage from offices to homes, but that it hasn't really decreased overall.
• Google will verify your emails. A security feature rolling out over the next few weeks will mark emails with an authenticated logo if they're safe to open.
• China won't let Tencent Music hold exclusive music labels. The country's antitrust regulator also fined Tencent for taking too long to report two of its acquisitions.
• India is using robots to help fight COVID-19. The robot, called Mitra, will float around a few hospitals to connect patients with loved ones, field patient questions and clean surfaces.
• Philippine lawmakers want a social media probe. A group of politicians is demanding an investigation on whether government funds were used to spread misinformation before the country's presidential election.

One More Thing

Facebook's ugly side

New York Times reporters Sheera Frenkel and Cecilia Kang's new book, "An Ugly Truth," is out today, and the Times reports that people inside Facebook were nervous about its release. And for good reason: It takes a hard look at all the scandals facing the company during the Trump presidency — everything from the manipulated Nancy Pelosi video to the Capitol riots — giving readers a play-by-play of what was happening on the inside using conversations with more than 400 sources.

And considering things didn't look that great from the outside, it's no wonder employees were nervous.

A MESSAGE FROM ANT GROUP

In 2020, U.S. merchants sold over $54 billion worth of products to Chinese customers on Alibaba's e-commerce platforms, which rely on Alipay to facilitate the transactions. The year prior to the pandemic, Chinese tourists in the U.S. engaged in 800,000 transactions using the Alipay App, for sales valued at $232 million.

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