BEIJING / HONG KONG, July 5 (Reuters) – Didi Global Inc (DIDI.N) said a regulatory order to remove its app store application in China could hurt revenues, while other recently listed Chinese companies in the United States was also the source of the problem. cybersecurity investigations.
The Cyberspace Administration of China (CAC) Sunday’s takedown order comes just two days after the regulator announced an investigation into the transport giant and less than a week after the company debuted on the stock exchange from New York. Read more
It also comes amid widespread regulatory squeeze on domestic tech companies, focusing on anti-competitive behavior and data security, which began with the scuttling of a planned $ 37 billion list by the affiliate of Alibaba Ant Group fintech at the end of last year.
“The cancellation of Ant’s IPO and this action on Didi show that IPOs can be very dangerous in China, highlighting the scale and operations that call for regulatory scrutiny,” said Martin Chorzempa, Principal Investigator at the Peterson Institute for International Economics.
On Monday, the CAC announced cybersecurity investigations into online recruiting company Zhipin.com and truck haulage companies Huochebang and Yunmanman, which have merged to form Full Truck Alliance (YMM.N). Like Didi, the owner of Zhipin.com, Kanzhun Ltd (BZ.O) and Full Truck Alliance went public on US listings last month. Read more
Full Truck Alliance has said it will cooperate with the investigation and make changes to comply with the rules. Kanzhun did not immediately respond to a request for comment.
“For a government keen to showcase its local champions, one would think that China would want to deal with these issues in a timely and private manner,” said Zennon Kapron, head of the Kapronasia research and advisory group, referring to the Didi and Investigations on the ants.
“The fact that this is not happening is a clear indication that China is looking to use these companies as a warning to other tech companies,” Kapron said.
THE FAILURE OF DIDI
The CAC said it ordered app stores to stop offering Didi’s app after finding that the company illegally collected users’ personal data. Read more
“The company expects the removal of the app could negatively impact its revenue in China,” Didi said in a statement, but did not specify the potential extent of the impact.
Analysts said they did not expect a major impact on profits because Didi’s existing user base in China is large. Removing the app does not affect existing users.
In a document filed in June, Didi reported revenue of about 42.2 billion yuan ($ 6.5 billion) for the quarter ended March 31. Of that total, 39.2 billion yuan came from its mobility division in China, while about 800 million yuan came from its international activities.
In addition to its dominant position in the Chinese VTC market, Didi is present in 15 other countries. Read more
Didi, who collects a large amount of mobility data for technology research and traffic analysis, said he will work to rectify any issues and protect the privacy and security of user data.
Didi is also the subject of an antitrust investigation by China’s market regulator, the State Administration for Market Regulation, sources told Reuters last month. Read more
The Global Times, a tabloid published by the official newspaper of the ruling Communist Party, People’s Daily, said on Monday that Didi’s apparent “big data analysis” ability could pose risks to users’ personal information.
“No Internet giant can be allowed to become a super Chinese personal information database with more details than the country, and these companies cannot be allowed to use the data as they wish,” he said in an opinion piece.
Didi’s shares fell 5% last Friday after the CAC’s investigation was announced, giving it a market value of $ 75 billion.
In its IPO prospectus, Didi said that “we follow strict procedures for collecting, transmitting, storing and using user data in accordance with our data security and privacy policies.”
SoftBank Group Corp (9984.T), whose Vision Fund unit has stakes in Didi and Full Truck Alliance, saw its shares drop 5% in Tokyo on Monday.
($ 1 = 6.4721 Chinese yuan)
Reporting by Tony Munroe, Yilei Sun in Beijing and Scott Murdoch in Hong Kong; Additional reporting by Aakriti Bhalla in Bangalore and Sam Nussey in Tokyo; Editing by Edwina Gibbs
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