China investigates Didi over cyber security days after its huge IPO

REUTERS/Kim Kyung-Hoon

Didi Global’s shares fell more than 10% in New York on Friday after China’s cyberspace agency said it had launched an investigation into the ride-hailing giant to protect national security and the public interest.

The Cyberspace Administration of China (CAC) said on its website that Didi was not allowed to register new users during its investigation, which was announced just two days after Didi began trading on the New York Stock Exchange.

Didi said in a statement to Reuters that it planned to conduct a comprehensive examination of cybersecurity risks and would cooperate fully with the relevant government authority.

Chinese internet regulators have tightened rules for the country’s tech giants in recent years, asking companies to collect, store and handle key data properly.

The cyberspace agency did not offer details about its investigation into Didi, but said the investigation was also to prevent data security-related risks, citing China’s national security law and cybersecurity law.

Didi, which offers a wide range of services in China and over 15 international markets, gathers vast amounts of real-time mobility data every day. It uses some of the data for autonomous driving technologies and traffic analysis.

Didi‘s shares fell as much as 10.9% after the open and were down 7% at 1335 GMT.

Didi does seem to be attracting a lot of regulatory pressure. The near-term impact depends a lot on how long a review lasts but Didi has a large enough base that we aren’t going to change our forecasts yet,” Redex Research analyst Kirk Boodry, who publishes on Smartkarma, told Reuters.

Adam Segal, a cybersecurity expert at the Council on Foreign Relations in New York, said while it was hard to know what was going on without more detail, “CAC has been looking at security of all large firms’ data as part of a crackdown on big tech”.

Didi, which raised $4.4 billion from its initial public offering (IPO), did not hold a celebration event for its market debut, an unusual move among Chinese companies.

The company is also facing an antitrust investigation, revealed by Reuters in June, looking at whether Didi used anti-competitive behaviours to drive out smaller rivals. It said at the time that it would not comment on “unsubstantiated speculation from unnamed source(s)”.

Didi‘s debut on Wednesday was the biggest U.S. listing by a Chinese company since Alibaba Group Holding Ltd in 2014.

Didi had aimed to raise up to $10 billion through its IPO to value the company at $100 billion. However, investors were critical of the valuation target during meetings ahead of the deal’s launch which pushed its size down.

Didi, which is also backed by technology investment giants Alibaba, Tencent and Uber, was founded in 2012 by Cheng Wei as Didi Dache, a taxi-hailing app.

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.