Vietnamese Tech Giant VNG Faces Police Investigation Amid Growth

On September 8, 2023, law enforcement officials conducted a raid on the Ho Chi Minh City headquarters of VNG, a prominent Vietnamese software company. The firm, established in 2004, has gained recognition as Vietnam's first unicorn startup, achieving a valuation of over $1 billion in 2014.

VNG issued a statement confirming their active cooperation with authorities during the ongoing investigation, assuring that their business operations would continue as usual. The scope of the inquiry reportedly extends to VNG and two affiliated entities, Zion JSC and Thanh Son Communication Company.

Known for its diverse portfolio, VNG has expanded beyond its initial focus on online gaming. The company now offers a range of services including cloud computing, digital payments, and operates Zalo, Vietnam's most widely used messaging application with over 100 million users. This expansion has led to partnerships with global tech giants such as Facebook and Google.

In recent financial reports, VNG disclosed a 30.3% year-over-year increase in revenue for the first half of 2023, reaching 4.3 trillion dong (approximately $174.7 million). Concurrently, the company managed to reduce its net loss by 51% compared to the same period in the previous year.

Despite its growth, VNG has faced challenges. In January 2023, the company withdrew its registration for an initial public offering (IPO) in the United States, without providing specific reasons for the decision. This move came after years of international expansion, with VNG establishing 14 offices worldwide and venturing into markets across Southeast Asia and the U.S.

The company's journey has not been without controversy. VNG has encountered issues related to data privacy and content moderation on its platforms, reflecting the complex landscape of digital services in Vietnam. Nevertheless, the firm has maintained its position as a key player in Vietnam's tech ecosystem, with significant market share in online advertising and continued investment in emerging technologies such as AI and machine learning.

As the investigation unfolds, VNG's ability to navigate regulatory challenges while sustaining its growth trajectory remains a focal point for observers of Vietnam's evolving tech industry.

"The investigation is still ongoing, and VNG continues to actively cooperate with the authorities, ensuring compliance with their requests."

This development underscores the increasing scrutiny faced by tech companies in Vietnam, as the country seeks to balance rapid digital innovation with regulatory oversight.