China investigates cybersecurity Didi days after huge IPO
BEIJING / HONG KONG, July 2 (Reuters) – Shares of Didi Global (DIDI.N) fell more than 10% in New York on Friday after China’s cyberspace agency said it had launched an investigation into the Chinese giant carpooling 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 Stock Exchange in New York. Read more
Beijing-based Didi said in a statement to Reuters that he plans to conduct a full cybersecurity risk review and will cooperate fully with the relevant government authority.
In one filing, he said that aside from suspending new user registrations in China, it was functioning normally.
Chinese internet regulators have tightened the rules for the country’s tech giants in recent years, requiring companies to properly collect, store and manage key data.
The cyberspace agency did not provide details of its investigation into Didi, but said the investigation was also aimed at preventing data security risks, citing China’s National Security Law and the Law on cybersecurity.
Didi, which offers a wide range of services in China and 15 international markets, collects large amounts of real-time mobility data every day. It uses some of the data for autonomous driving technologies and traffic analysis. Read more
Didi set out related regulations in China in its IPO prospectus and stated that “we follow strict procedures for collecting, transmitting, storing and using user data in accordance with our security and privacy policies. data confidentiality “.
Two investors, however, told Reuters that company executives did not discuss possible cybersecurity regulations with investors during the call they joined for Didi’s IPO roadshow.
Didi shares fell 10.9% after the opening and 7% at 1.35pm GMT.
“Didi seems to be attracting a lot of regulatory pressure. The short term impact depends a lot on the length of a review, but Didi has a base broad enough that we are not going to change our forecasts yet,” Redex Research analyst Kirk Bodry, who posts on Smartkarma, told Reuters.
Adam Segal, a cybersecurity expert at the Council on Foreign Relations in New York, said it was difficult to know what was going on without further details, “CAC looked at the data security of all major companies as part of the process. of a crackdown on big technology “.
Didi, which raised $ 4.4 billion on its initial public offering (IPO), has not held a celebration event for its market debut, an unusual move among Chinese companies.
Didi, founded by Will Cheng in 2012, has faced several regulatory investigations in China over safety and its operating license. Read more
The company is also the subject of an antitrust investigation, revealed by Reuters in June, to determine whether Didi used anti-competitive behavior to oust his smaller rivals. He said at the time that he would not comment on “unsubstantiated speculation from anonymous sources.” Read more
Didi’s debut on Wednesday was the highest U.S. listing of a Chinese company since Alibaba Group Holding Ltd in 2014.
Didi aimed to raise up to $ 10 billion through its IPO to value the company at $ 100 billion. However, investors criticized the valuation target in meetings leading up to the deal’s launch, which caused its size to drop.
Didi is also backed by tech investment giants including SoftBank Group (9984.T), Alibaba, Tencent (0700.HK) and Uber (UBER.N). Read more
Reporting by Tony Munroe and Yilei Sun in Beijing, Julie Zhu, Scott Murdoch and Kane Wu in Hong Kong and Subrat Patnaik in Bengaluru; Editing by Sumeet Chatterjee, Andrew Heavens, Arun Koyyur, David Clarke and Louise Heavens
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