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Didi says removal of applications could damage revenue, other Chinese companies listed in the United States are polled by Reuters

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© Reuters. FILE PHOTOGRAPHY: The logo for the Chinese company Didi Global Inc is depicted during the IPO at the New York Stock Exchange (NYSE) in New York City, United States, on June 30, 2021. REUTERS / Brendan McDermid

By Tony Munroe, Yilei Sun and Scott Murdoch

BEIJING / HONG KONG (Reuters) -Didi Global Inc said a regulatory order that its app be removed from the app store in China could hurt revenue, while other Chinese companies recently listed in the US have also been found the subject of cybersecurity investigations.

Sunday’s removal order from China’s cyber administration () comes just two days after the regulator announced an investigation into the travel giant and less than a week after the company debuted on the stock exchange. of New York.

It also comes amid a widespread regulatory push on national technical firms, focusing on anti-competitive behavior and data security, which began with the scuttling of a $ 37 billion list planned by Alibaba (NYSE 🙂 Fintech affiliated Ant Group at the end of last year.

“Both the Ant IPO cancellation and this action on Didi show that IPOs can be very dangerous in China, shedding light on the scale of one and operations that call for regulatory scrutiny,” said Martin Chorzempa, former fellow of the Peterson Institute for International Economics.

On Monday, the CAC announced cybersecurity investigations at online recruitment company Zhipin.com and at truck companies Huochebang and Yunmanman, which have teamed up to form Full Truck Alliance. Like Didi, the owner of Zhipin.com Kanzhun Ltd and Full Truck Alliance went public on the US charts last month.

Full Truck Alliance said it will cooperate with the probe and make changes to comply with the rules. Kanzhun did not immediately respond to a request for comment.

“For a government that is committed to showcasing its home champions, one might think that China would like to address these issues in a timely and private manner,” said Zennon Kapron, head of research and consulting group Kapronasia, referring to the Ants and Investigations of ants.

“The fact that this is not happening is a clear indication that China is looking to use these companies as a warning to other technology companies,” Kapron said.

DIDI’S DOLDRUMS

The CAC said it had ordered the app stores to stop offering Didi’s app after it found that the company had illegally collected users ’personal data.

“The Company expects that the elimination phase may have an adverse impact on its revenues in China,” Didi said in a statement but did not elaborate on the potential extent of the impact.

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Analysts have said they do not expect greater success in earnings, since Didi’s existing user base in China is large. Removing the app does not affect existing users.

In a June filing, Didi reported revenues of about 42.2 billion yuan ($ 6.5 billion) for the three months ended March 31. Of this, 39.2 billion yuan came from its mobility division in China while about 800 million yuan came from its international business.

In addition to its dominant position in the China market, Didi operates in 15 other countries.

Didi, who collects a vast amount of mobility data for technology research and traffic analysis, said he will strive to resolve any issues and protect the privacy and security of users ’data.

Didi is also the subject of an antitrust probe by China’s market regulator, the State Administration for Market Regulation, sources told Reuters last month.

The Global Times, a tabloid published by the Communist Party’s official People’s Daily newspaper, said Monday that Didi’s apparent ability to “analyze big data” could pose risks to users ’personal information.

“No Internet giant can be allowed to become a super database of personal information of the Chinese people that contains more details than the country, and these companies cannot be allowed to use the data as they wish. , ”he said in an opinion piece.

Shares in Didi lost 5% last Friday after news of the CAC probe, giving a market value of $ 75 billion.

In his IPO statement, Didi said “we follow strict procedures in the collection, transmission, archiving and use of user data in accordance with our security and privacy policies.”

SoftBank Group Corp., whose Vision Fund unit holds stakes in both Didi and Full Truck Alliance, saw its shares fall 5% in Tokyo on Monday.

($ 1 = 6.4721)




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