(Bloomberg) – China’s cyberspace regulator has ordered app stores to remove Didi Chuxing, dealing a blow to a transport giant that just a few days ago pulled off one of the biggest initial public offerings in the world. United States of the last decade.
China’s Cyberspace Administration announced the ban on Sunday, citing serious violations of the collection and use of personal information by Didi Global Inc., without giving further details. The unusually swift move came two days after the regulator announced it was starting a review of the company’s cybersecurity.
This effectively requires the biggest app stores in China, operated by Apple Inc. and smartphone makers Huawei Technologies Co. and Xiaomi Corp., to remove Didi from their offerings. But the current half a billion users can continue to order groceries and other services as long as they download the app before Sunday’s order.
China’s powerful internet regulator’s surprise investigation and swift decision adds to Didi’s scrutiny on issues ranging from antitrust to data security. The company is grappling with a massive antitrust investigation of Chinese internet companies with uncertain results for Didi and his peers as the main funder Tencent Holdings Ltd. It lost up to 11% of its market value at some point on Friday, after the watchdog revealed its investigation.
More generally, Beijing has restrained the growing influence of China’s largest internet companies, stepping up efforts to tighten the ownership and handling of the information treasures that the online powerhouses of Alibaba Group Holding Ltd. to Tencent and Didi recover hundreds of millions of users daily. The regulator on Sunday ordered Didi to rectify its problems in accordance with legal requirements and national standards, and take action to protect the personal information of its users.
On Sunday, the company said on its official social media account that it had already halted new user registrations on July 3 and is now working to rectify its application in accordance with regulatory requirements. Didi’s IPO was led by Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. In total, the rideshare company appointed 20 advisers to manage the float.
The ACC did not specify on Friday what it was going to look into. But the timing of his announcements was important, coming not only from Didi’s IPO, but also from the Communist Party’s 100th anniversary celebrations in Beijing.
Didi, one of the largest investments in SoftBank Group Corp.’s portfolio, beat Uber Technologies Inc. in China in 2016 before embarking on ambitious international expansion. It began trading in New York on Wednesday after an initial public offering of $ 4.4 billion, making the biggest start for a Chinese company in the United States after Alibaba.
But Didi had to resolve to go public at a market value much lower than that previously mentioned. It debuted at around $ 67 billion, barely more than its last funding round in 2019, and well below the most optimistic expectations of $ 100 billion – a reflection of the regulatory scrutiny that has pursued it since. a pair of murders in 2018 this founder Cheng Wei called his “darkest days”.
The Beijing-based company responded to the crackdown that followed with a shootout in efforts to improve security on its network. He began exploring new ventures to offset the slowing growth in mass transit, from car repairs to grocery delivery. It served him well during the coronavirus pandemic, when entire cities shut down. The company made a profit of $ 837 million in the March quarter – a rarity among recent high-profile IPOs like Kuaishou Technology.
The latest move against Didi highlights the uncertainty surrounding the Chinese government’s crackdown on the internet industry. Earlier this year, the State Administration for Market Regulation announced that it was investigating alleged abuses – including forced exclusive trade deals – in Meituan, also days after the third-largest company China’s Internet raised $ 9.98 billion through a record placement of stocks and the sale of convertible bonds. .
“This is deeply unfair to investors,” Brock Silvers, chief investment officer of Hong Kong-based private equity firm Kaiyuan Capital, said on Friday. “And as a critical issue for market integrity, Chinese regulators should stop allowing companies to register while they are under investigation.”
(Updates with Didi’s statement from the fifth paragraph)
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