Topline
Just days after DiDi Global pulled off one of the biggest U.S. initial public offerings this decade, a Chinese cybersecurity regulator has ordered its removal from China's smartphone app stores, alleging the ride-hailing company illegally collected and used customers' personal information, according to multiple reports.
Just last week, DiDi raised $4.4 billion from U.S. investors in one of the decade's largest initial ... [+]
Key Facts
Two days after announcing a cybersecurity review of DiDi, the Cyberspace Administration of China ordered app stores to remove DiDi from their platforms after finding the company "severely violat[ed] regulations around the collection of personal data," though further specifics were provided.
The regulator also asked DiDi, China's largest ride-hailing company, to "rectify existing problems" in accordance with national standards and legal requirements to "protect the personal information security of [the company's] vast number of users."
On Friday, the company said in a regulatory filing it would "fully cooperate" with the government's review and suspend new user registration in China.
Apart from the new user suspension, DiDi said Sunday there would be no service interruptions for existing users who have downloaded the app.
Shares of DiDi closed Thursday nearly 20% above their Tuesday offering price of $14, but they're down nearly 10% since amid the cybersecurity investigation.
Crucial Quote
“We sincerely thank the competent authority for guiding DiDi to investigate risks,” DiDi said in a Sunday statement. “We will earnestly rectify and reform, continuously improve risk prevention awareness and technical capabilities, continue to protect user privacy and data security, prevent network security risks, and continue to provide users with safe and convenient services.”
Key Background
The intensifying regulatory scrutiny around DiDi comes fresh off its massive Wall Street debut on Wednesday. Though it failed to meet investors' highest expectations, the company raised $4.4 billion from investors in one of the past decade's biggest IPOs. DiDi ended its first day on the New York Stock Exchange with a market capitalization of about $75 billion, making it nearly four times more valuable than U.S. counterpart Lyft and almost as big as Uber (which sports a $95 billion market cap). The showing even made DiDi President Jean Qing Liu a new billionaire.
Tangent
DiDi's not alone in facing the wrath of Chinese regulators, who've been cracking down on the nation's big-tech leaders—including Tencent, Alibaba and JD.com—with new actions aimed at curbing risk and unfair labor practices. U.S.-listed shares of China's technology giants have struggled as a result, with JD, for example, plunging nearly 12% this year. Notably, the country helped spark one of the biggest sell offs ever in the booming cryptocurrency market after warning financial firms against conducting business in the space and encouraging provinces to ban crypto-mining.
Surprising Fact
At the end of March, DiDi said it had about 493 million active users over the prior year, more than 75% of which (377 million) hailed from China.
Further Reading
China Regulator Orders Didi to Be Removed From App Stores (Bloomberg)
China suspends Didi app over data violation (Reuters)
IPO Of Chinese Ride-Hailing Firm DiDi Makes Its President A Billionaire (Forbes)
