China investigates three big tech companies after ‘killing’ Didi

The subject of the investigation are companies listed on the US stock market recently, although geopolitical tensions between China and the US are already high, according to CNN .

On Monday, China’s cybersecurity watchdog announced it had begun investigating truck rental platforms Yunmanman and Huochebang, and job listing website Boss Zhipin. New users cannot register for these three applications during the investigation.

Yunmanman and Huochebang, China’s two major truck-hailing apps, call themselves “Uber for trucks”.

Didi is China’s largest ride-hailing service. Photo: Financial Times

The two companies merged in 2017 into a new company – Full Truck Alliance, which listed on the New York Stock Exchange last month and is now valued at $21 billion.

Boss Zhipin is one of China’s largest online job listing platforms. Boss Zhipin’s parent company Kanzhun has been listed in New York since June and has a market capitalization of nearly $15 billion.

In a statement, the Office of Cybersecurity Assessment said the investigations were conducted to “prevent national data security risks, maintain national security and protect the public interest”.

Full Truck Alliance says it will actively cooperate with its cyber security investigation and thorough audit.

Didi Chuxing is banned

The announcement came just hours after the Cyberspace Administration of China (CAC) banned Didi, the country’s largest ride-hailing service, from app platforms over concerns that Didi “posed a cyber security risk to customers.” customer”.

The CAC is China’s top internet regulator, and the CAC’s Cyber ​​Security Assessment Office is responsible for reviewing cybersecurity risks.

“The Didi Chuxing app was found to have seriously violated the law in the collection and use of personal information,” the CAC said on Sunday.

CAC asked Didi to resolve the issue in its application to comply with Chinese laws and ensure customer safety.

Didi, which has 377 million users in China alone, said it was complying with the country’s requirements, pulling the app from exchanges during app changes to meet regulatory requirements. physical.

Didi also said customers and drivers who downloaded the app would not be affected.

“We sincerely thank the CAC for guiding Didi to overcome the risks,” Didi said.

“We will fix and improve our ability to avoid risks and provide safe and convenient services for users.”

The ban on Didi comes less than a week after it listed on the New York Stock Exchange in the largest US stock offering by a Chinese company since Alibaba launched in 2014.

Just two days later, on Friday, China launched an investigation into Didi and suspended new user registrations on the app. Didi’s share price plummeted on Friday.

The Office of Cyber ​​Security Review announced the suspension “in order to prevent national data security risks” and in accordance with the National Security Act and the Cybersecurity Law. The wording is identical to Monday’s statement for Yunmanman, Huochebang and Boss Zhipin.

Chinese newspaper Global Times on Sunday said Didi’s “big data analytics” on people’s behavior were potentially risky.

“[We] must never let any internet giant become a super-database of Chinese personal information, containing more detailed information than the state, let alone give them the right to use such data at will,” the newspaper wrote.

“Especially for a company like Didi, which is listed in the US and whose first and second shareholders are both foreign companies, the state needs to strictly manage its information security. not only to maintain the privacy of personal information, but also to maintain national security.”

IPO hasty

According to Ping An Securities, based in Shenzhen, based on the law cited by the regulator, Didi may be under investigation for purchasing certain products and services from other suppliers. , threatening national data security.

“Didi will definitely have to test core network equipment, high-performance computers and servers, mass storage devices, large databases and application software, network security appliances and power services. cloud computing, categorize them, and make the necessary adjustments to meet regulation,” Ping An analysts wrote.

Yang Sirui, an analyst at Bank of China International, said Didi listed in the US in a hurry, possibly due to pressure from investors.

“Listing Didi as soon as possible will meet the capital need. But if Didi arbitrarily collects users’ private data, misuses it or makes money from it illegally, the business will surely be lost. sanctions by Chinese regulators”.

Since its founding in 2012, Didi has gone through several rounds of private funding, raising tens of billions of dollars from venture capital funds or major tech firms.

According to the IPO prospectus, SoftBank Vision Fund is currently Didi’s largest shareholder, with a 21.5% stake. Then there are Uber (UBER) and Tencent (TCEHY) with 12.8% and 6.8%.

The legal actions against Didi and other companies are part of a wide-ranging “suppression” of Big Tech companies in China, according to CNN .

In March, Chinese President Xi Jinping emphasized the need to regulate “platform” companies in the country.

Several tech companies over the past few months have faced investigations for alleged monopolistic practices or violations of customer rights, resulting in record fines and radical adjustments.

In April, Alibaba (BABA), the online shopping giant co-founded by Jack Ma, was fined a record $2.8 billion after the antitrust regulator concluded it had “behave like a company.” monopoly”.

A few days after the punishment was issued, Ant Group, another division of Jack Ma’s empire, was ordered to overhaul its operations and become a financial company supervised by the central bank.

China International Bank’s Yang said that Didi faces a different kind of investigation. “As a major ride-hailing platform, Didi possesses sensitive data that may be relevant to national security, such as location data.”