Didi shares plummeted as Chinese regulators launched data investigations

Chinese cybersecurity regulators launched an investigation into Didi, which caused the ride-hailing group’s share price to plummet on the third morning of trading in New York.

The China Cyberspace Affairs Office suddenly announced the news on Friday night Beijing time. Two days before, Didi had raised at least US$4 billion from the company. Largest IPO of the year.

Despite record fundraising, Didi kept a low profile, did not celebrate on the domestic Weibo social media channels, did not organize a press conference, and did not participate in the bell ringing ceremony in New York.

The Cyberspace Administration stated that the investigation is to “maintain national data security and protect national security” and Didi must stop new user registrations during the investigation period in order to “cooperate with cybersecurity investigations to prevent the spread of risks”. “.

Didi told the British “Financial Times” that it will “actively cooperate” with the investigation and “under the guidance and supervision of relevant departments, we will comprehensively examine our cybersecurity risks.” Its shares fell 11% at the opening in New York early Friday.

“This is a signal for large technology companies to warn them of the importance of data security and personal data protection,” said Wang Congwei, a partner at Beijing Jingshi Law Firm.

China’s cyber security review is a new measure introduced last year to protect what it considers “critical information infrastructure,” which is a broad category that includes transportation providers and large database systems. One of its purposes is to prevent data leakage of critical information.

According to Chinese regulations, ordinary investigations can take up to 30 working days, and complex cases can be extended by an additional 15 working days.

Didi has more than 377 million users and 13 million drivers in China every year, which means that it stores a large amount of user data, which may lead to its being regarded as a critical information infrastructure by Chinese regulators.

The platform not only collects data on the itinerary and user location, but also after the passenger safety scandal in 2018, Record audio During each ride.

The company has not yet faced a major public data breach. After the passenger murder in 2018, Didi was condemned by the police and traffic regulators for not sharing more data. This collapse highlighted the need for more data sharing and higher data security within the Chinese government. Tensions between.

Like other ride-hailing peers, Didi is known as May market supervision And was told to solve the problem of high driver costs and arbitrary price changes.

Additional reporting by Liu Nian

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