[ad_1]
Unexpected investigations by Chinese Internet regulators have intensified Didi’s scrutiny on issues ranging from antitrust issues to data security.
Didi Global Inc. fell sharply on Friday after China stated that it will begin to talk to the ride-hailing company two days after it made its debut in one of the largest U.S. stock markets in the past decade. Conduct a cyber security review.
The Cyberspace Administration of China stated that this move is to prevent data security risks, maintain national security, and safeguard public interests. Didi stopped new user registration during the investigation. The company only started trading after its New York IPO on Wednesday, and its share price fell 7% to $15.26.
Unexpected investigations by Chinese Internet regulators have intensified Didi’s scrutiny on issues ranging from antitrust to data security. The company has been struggling to respond to extensive antitrust investigations against Chinese Internet companies, and the results of peers such as Didi and its main supporter Tencent Holdings are uncertain.
More broadly, Beijing has been curbing the growing influence of China’s largest Internet companies, and has intensified its efforts to strengthen the ownership and processing of information obtained from hundreds of millions of pieces of information every day by Internet giants such as Alibaba Group, Tencent and Didi. . user.
On Friday, Didi’s market value fell by as much as 11%. This rapid change highlighted the uncertainty surrounding the Chinese government’s crackdown on the Internet industry.
Earlier this year, China’s third-largest Internet company raised US$9.98 billion through a record allotment and convertible bond issuance. A few days later, the State Administration for Market Regulation announced that it was investigating suspected abuses, including Meituan’s mandatory merchant exclusivity. arrangement.
“This is very unfair to investors,” said Brock Silvers, chief investment officer of Kaiyuan Capital, a Hong Kong-based private equity firm. “As a key issue of market integrity, Chinese regulators should stop allowing companies to go public during the investigation.”
CAC did not specify what it will investigate. But the timing of its announcement is significant, not only after Didi’s initial public offering, but also after the Chinese Communist Party celebrated its 100th anniversary in Beijing.
Didi said in a statement: “During the review process, Didi will fully cooperate with relevant government departments.” “We plan to comprehensively investigate cyber security risks and continuously improve the cyber security system and technical capabilities.
Didi was founded by Cheng Wei in 2012. In 2016, it successfully forced its U.S. rival Uber Technology to withdraw and embarked on an ambitious international expansion. Its IPO in the United States is highly anticipated, becoming the second largest Chinese company IPO after Alibaba.
Since the two murders that Cheng called the “darkest days” in 2018, Didi has been facing regulatory scrutiny. The Beijing-based company made a series of efforts in subsequent crackdowns to improve the security of its 5 billion network.
It began to explore new businesses to offset the slowdown in the growth of ride-hailing services, from car repairs to grocery delivery. This worked well during the coronavirus pandemic when the entire city came to a standstill. The company achieved a profit of $837 million in the March quarter—a rare occurrence in recent high-profile IPOs.
The company was one of 34 Internet giants ordered by regulators to correct “excessive behavior” in April. The company warned in a regulatory document that it could not assure investors that government officials would be satisfied with its efforts. Or it will escape punishment.
[ad_2]
Source link
