(Yicai Global) Jan. 23 -- The replacement of the chief executive at Yidian Zixun has brought to light a battle for control at the Chinese personalized news aggregation app.
The Dongguan-based firm replaced Li Ya with co-founder Ren Xuyang as CEO yesterday. Li responded yesterday, saying the dismissal was not compliant with regulations and is not legally valid.
The debacle brings to the surface tensions among shareholders that have been hidden for a long time from the public. The conflict relates to a change in equity triggered by its ongoing capital operation, which may include a new round of financing or a listing, according to an internal email from Li.
Relations became strained between Liu Shuang, chief executive of Phoenix New Media, Yidian's largest shareholder, and Li. The latter aimed for an independent listing for Yidian while Phoenix wants to keep it under its control. The company continues to up its investment in the platform while also making efforts to consolidate both parties' financial statements.
With the expansion of Yidian's scale and increased valuation, the disagreement between shareholders in favor of independent growth, spearheaded by Li, and its largest shareholder Phoenix is becoming increasingly significant.
The firm was formed at almost the same time as China's biggest news content platform Jinri Toutiao, run by Bytedance Technology. Yidian boasted some 70 million daily active users as of the end of last year and J.P. Morgan Chase valued the firm at between CNY15 billion (USD2.2 billion) and CNY18 billion last August.
Toutiao's DAUs reached 120 million last July, while parent ByteDance has developed a series of key mobile apps including short video network TikTok, known as Douyin in China. The platform boasts over 200 million DAUs. The company's value jumped to USD75 billion last year after new investment, making it the world's most valuable startup.
The firm has been actively paying attention to the requirements for companies listing on the upcoming Shanghai tech innovation board, according to Li.
Liu has always regarded Yidian as an important part of Phoenix's mobile layout. The aggregator constructs its content through personalized recommendation and search, satisfying users' demand for getting information in their fragmentized time, he said.
Li joined Chinese outlet Phoenix New Media as chief operating officer in June 2006 before switching to chief financial officer until November 2010. Phoenix invested USD30 million in Yidian Zixun parent Particle in 2014 and Li came in as Yidian Zixun CEO as well as Phoenix President. Li resigned from his position at Phoenix in September 2017 to devote himself to developing Yidian Zixun.
Phoenix has failed to achieve effective consolidation so far and Yidian brought in a new shareholder Cultural Investment and Development Group following a USD112 million funding round in October 2017.