Sat. May 28th, 2022


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China opens an inquiry into Didi, two days after the ride-hailing app’s Wall Street debut.

2 min read

Two days into Didi’s life as a publicly traded company on Wall Street, China’s internet regulator said new user registrations on the Chinese ride-hailing platform would be suspended while the authorities conducted what they called a “cybersecurity review” of the company.

The terse announcement, issued Friday evening in China, did not explain what had prompted the review nor what it would entail — only that its purpose was “to guard against national data security risks, protect national security and uphold the public interest.”

But the surprise intervention by Beijing immediately called to mind last year’s failed initial public offering by Ant Group, the Chinese fintech giant, whose share sale in Shanghai and Hong Kong was halted at the 11th hour after regulators summoned company executives to discuss new supervision.

In an emailed statement, Didi said it would cooperate with the authorities. “We plan to conduct comprehensive examination of cybersecurity risks, and continuously improve on our cybersecurity systems and technology capacities,” the statement said.

Didi is China’s leading ride-hailing app, having purchased Uber’s China operations in a 2016 deal that ended a period of fierce competition between the two companies. Didi’s shares began trading on the New York Stock Exchange on Wednesday.

Chinese regulators have been ramping up their scrutiny of their wider internet industry since thwarting Ant’s I.P.O., criticizing what they call anticompetitive business practices and inadequate safeguards for consumers and their personal data.

In April, China’s antitrust authority imposed a landmark $2.8 billion fine on Alibaba, the e-commerce giant. A few days later, Didi was one of nearly three dozen Chinese internet businesses that were hauled before regulators and ordered to ensure their compliance with antimonopoly rules. Didi promptly issued a statement, which the antitrust regulator published on its website, vowing to “promote the development and prosperity of socialist culture and science” and to strictly obey the law.

Chinese law requires major tech platforms to observe strict standards when it comes to handling user data.

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