DIDI is under regulatory scrutiny, despite the fact that the business merely went public in New York last week.
DIDI and others are being investigated by China’s Cyberspace Administration.
Softbank (SFTBF), UBER, and Tencent are among DIDI’s investors and backers (TCEHY).
DIDI debuted on the New York Stock Exchange last week to considerable fanfare, raising roughly $5 billion in the process, and now has a market capitalization of $75 billion. However, China’s Cyberspace Administration has launched an investigation into the corporation.
Didi Global Inc is a Chinese corporation that provides taxi and ride-hailing services. According to the company’s own website, “The world’s largest mobility technology platform, DiDi Global Inc. (NYSE: DIDI), is headquartered in New York City. It provides ride-hailing, taxi-hailing, chauffeur, hitch, and other forms of shared mobility, as well as car solutions, food delivery, intra-city freight, and banking services, across Asia Pacific, Latin America, and Africa, as well as Central Asia and Russia.”
DIDI collects vast volumes of data on mobility and traffic analysis as part of its operations, but the corporation has maintained that it adheres to tight processes when it comes to this data. China is apparently concerned about the large amounts of data that online companies can collect, and has launched a crackdown on DIDI, as well as expanding the inquiry to include other tech companies.
The Chinese Cyberspace Administration (CAC) has ordered app shops to remove Didi’s app from their storefronts. DIDI responded with a statement claiming that the app’s removal may have a negative impact on Chinese revenue:
The “DiDi Chuxing” app can no longer be downloaded in China once it has been removed from app stores, while existing users who have previously downloaded and installed the program on their phones may continue to use it. The company will work to correct any issues, strengthen its risk prevention awareness and technological capabilities, safeguard users’ privacy and data security, and continue to deliver safe and easy services to its customers. The company anticipates that the app’s removal will have a negative impact on revenue in China.
According to Reuters, the Chinese cyber investigation has expanded to include Kanzhun Ltd (BZ.O), the owner of Zhipin.com, Huochebang and Yunmanman, both of which are part of the Full Truck Alliance (YMM). According to the Chinese Cyberspace Administration, new user registrations should be halted.
This is a fresh development in the regulatory crackdown that engulfed Jack Ma and the Alibaba Group (BABA) towards the end of 2020. Jack Ma pulled away from the spotlight after being accused of being overly critical of the Chinese authorities. This re-emphasizes the long-term stability of Chinese tech investments, and most of their stocks are down substantially in Asian trading (US markets closed for July 4 holiday). Tencent (TCEHY) is down 4%, BABA is down 3%, and other companies are driving the Hang Seng Index down./n
