Despite calling Los Angeles’ Venice Beach boardwalk home, Snap Inc., the parent of popular social media app Snapchat, is concerned about how foreign governments could harm its business.
In its IPO filing released Thursday, Snap listed Britain’s departure from the European Union, or Brexit, and China’s strict regulations as risk factors. The volatility of both countries’ political environments could limit the company’s ability to grow and harm existing portions of Snap, its filing said.
Snap has more than 10 million daily active users in Britain and has licensed a portion of its intellectual property to their UK subsidiary. Going forward, Snap intends to set up a large portion of its non-U.S. operations there, but Brexit could threaten that.
“The political and economic instability created by Brexit has caused and may continue to cause significant volatility in global financial markets and uncertainty regarding the regulation of data protection in the United Kingdom,” the filing said. “Brexit could also have the effect of disrupting the free movement of goods, services, and people between the United Kingdom, the European Union, and elsewhere.”
In January, Snap announced it will bill advertising revenue from Britain through the U.K., denying rumors it was setting up its international headquarters in London.
China, meanwhile, is ranks second in the top ten advertising markets in the world, behind the United States. Snap hasn’t been able to establish an operating presence in the country, though. Google is heavily restricted in China, and Snap relies on it to power its infrastructure.
“We do not know if we will be able to enter the market in a manner acceptable to the Chinese government,” Snap said in its filing.
Despite being banned, Snap said in December that it opened a technology office in Shenzhen, China, that will focus on research and development Spectacles, the company’s sunglasses featuring a camera.
The self-defined camera company expressed a general concern about foreign governments in its filing, saying they could censor Snapchat in their countries.
“If foreign governments think we are violating their laws, or for other reasons, they may seek to restrict access to Snapchat, which would give our competitors an opportunity to penetrate geographic markets that we cannot access,” Snap wrote.
So far, the company’s top markets remain United States and Canada, where it has more than 60 million daily active users, but its inability to tap into other markets could limit its growth going forward.