Image source,Getty Images
Didi Travel company logo.
China’s National Internet Information Regulatory Agency recently launched a cybersecurity review of China’s online car rental platform “Didi Travel” and decided to prohibit Didi from registering new users during the review.
On Saturday (July 3), Li Min, vice president of Didi Chuxing’s global company, said that the company stores all user and road data in China on its domestic servers, and it is “absolutely impossible” to leak data to the United States.
Didi has just made an initial public offering (IPO) in the United States on June 30. Some social media users questioned the company’s data transfer on Weibo. Li Min responded that the company will sue these users.
China’s Cyberspace Administration of China initiates investigation
Last Friday (July 2), China’s National Internet Information Office announced that it has initiated a review of Didi Travel to protect national security and public interests.
According to the announcement of the Cyber Security Review Office under the agency, “In order to prevent national data security risks, maintain national security, and protect the public interest, cyber security review is conducted in accordance with the National Security Law of the People’s Republic of China and the Cyber Security Law of the In accordance with the “Network Security Review Measures”, the office conducts a network security review on Didi Travel.”
The announcement also stated, “In order to cooperate with the network security review and prevent risks from expanding,’Didi Travel’ will stop new user registration during the review period.”
These moves caused Beijing-based Didi shares to fall 5% on Friday.
On July 3, Li Min posted on Weibo, “Like many Chinese companies listed overseas, the data of Didi’s domestic users is stored on domestic servers, and there is absolutely no possibility that the data will be handed over to the United States. In addition, related malicious Although the rumors have already taken the initiative to delete posts, we resolutely sue for rights protection.”
In addition to user data, netizens also questioned whether the number of roads has been submitted. In his latest response, Li Min stated that the data he called “includes road data” and called on netizens to “not speculate maliciously.”
Before Li Min’s post was published, Aequitas research director Sumeet Singh told Reuters on Saturday, “I’m not sure what the final impact will be, but the crackdown by the regulators has been a constant concern, even in the market. Previously, Didi had been questioned twice by regulatory agencies.”
“This time preventing the company from absorbing new users will not cause much harm to the company as long as it does not last too long, because the company already has more than 80% of the market share.
According to Reuters, the network agency did not specify how long the review will last or provide other details.
Image source,Getty Images
A driver uses Didi Chuxing while driving.
Seeking to list in the U.S. when Sino-U.S. relations are strained
Two days before the launch of the review, Didi was listed and traded on the New York Stock Exchange. Raising 4.4 billion US dollars, the first day of listing, the market value of 68.49 billion US dollars.
At the same time, the company’s stock price closed only 1% higher than the issue price of $14, after the company’s stock price fell back from its earlier strong rise.
This is the largest listing of a Chinese company in the US since Alibaba went public in the US in 2014. It is also the latest Chinese company to profit from the booming US stock market.
Although relations between Washington and Beijing have been strained in recent years, and US regulators have also expressed concern about the financial reports of some Chinese companies, under the huge temptation of the US capital market, the number of Chinese companies seeking to list in the US has been on the rise.
According to data from financial market data provider Refinitiv, in the first half of this year, about 29 Chinese companies raised US$7.6 billion through IPOs.
According to a Reuters report in March, Didi initially hoped to value up to $100 billion. Allegedly, expectations have been lowered after potential investors expressed concern about the speed and profitability of the company’s expansion plans.
Like most ride-hailing platforms, Didi has been at a loss until it reported a profit of $30 million in the first three months of this year.
In 2020, the company reported that due to its business being hit by the pandemic, the company lost $1.6 billion a year.
Image source,Reuters
Japan’s Softbank is Didi’s largest single investor, holding more than 20% of the shares. It also has the support of Chinese technology giants Alibaba and Tencent.
Didi Chuxing and China’s regulation of tech giants
Didi provides services in China and 15 international markets, collects a large amount of real-time mobile data, and uses some of the data for autonomous driving technology and traffic analysis.
The company was founded by Cheng Wei in 2012 and has already faced regulatory investigations regarding safety and operating permits in China. Cheng Wei once said that he had the idea of launching a taxi-hailing platform in 2012, when it was difficult for him to get a taxi on a cold night in Beijing.
Cheng Wei owns 6.5% of the company’s shares, and because of the dual-shareholding structure commonly adopted by technology companies, he owns 35.5% of the voting rights.
Japan’s Softbank is Didi’s largest single investor, holding more than 20% of the shares. It also has the support of Chinese technology giants Alibaba and Tencent.
After Didi acquired Uber China in 2016, Uber also owns 12% of the company.
It was reported in June this year that Didi was being investigated by the Chinese market regulator.
Didi Chuxing’s plan to enter the international market
Beijing is gradually taking control of China’s technology giants, including Alibaba and Tencent. According to Reuters, China’s State Administration for Market Regulation is investigating whether Alibaba has unfairly squeezed out smaller competitors.
Didi said on Friday that it plans to conduct a comprehensive inspection of cyber security risks and will fully cooperate with relevant government departments. The company also stated that, except for the suspension of new user registration in China, the company is operating normally.