China widens crackdown beyond Didi, roiling global investors

“We must never let any internet giant control a super database that has more detailed personal information than the state, let alone giving it the right to use the data at will,” the paper said in the commentary. While it’s not clear how Didi illegally collected personal data, companies should gather the least amount of information required for their services, it added.

The probe is part of a wider crackdown on China’s largest internet corporations, as the government seeks to tighten the ownership and handling of the troves of information they gather daily from hundreds of millions of users. As part of the reviews, the Cyberspace Administration of China ordered Didi, Full Truck Alliance’s Huochebang and Yunmanman platforms, as well as Kanzhun’s Boss Zhipin to halt new registrations, though existing customers can continue to use their services.

The Didi probe, together with the other investigations announced today, show how the tensions between China and the US is spilling over into the capital markets.

Shen Meng, director Chanson & Co

On Sunday, Didi said on social media that it had already halted new user registrations as of July 3 and was now working to rectify its app in accordance with regulatory requirements. It offered its sincere thanks to authorities for their oversight. In a follow-up statement, Didi said the regulatory move may have “an adverse impact” on its revenue in China.

The investigation comes hot on the heels of Didi’s float, which listed on Wednesday in New York after a $US4.4 billion ($5.8 billion) IPO – the largest by a Chinese firm in the US after Alibaba. SoftBank owned roughly 20 per cent of Didi following the listing, while Uber’s stake was about 12 per cent, according to an earlier Didi filing. Founder Cheng Wei owned about 6.5 per cent, just ahead of the 6.4 per cent held by Tencent. SoftBank sank 5.4 per cent in Tokyo trading Monday to the lowest since December 8.

Even before the crackdown, Didi had been under close scrutiny from regulators since a pair of murders in 2018 that founder Cheng has called the firm’s “darkest days.” It was among 34 firms told by the antitrust watchdog to conduct self-inspections and rectify abuses, while the transport ministry had ordered ride-hailing companies including Didi to review their practices relating to driver income and pricing.

Full Truck Alliance, backed by Tencent, is little changed since it raised $US1.6 billion in a June 21 listing. Kanzhun, also part of Tencent’s investment portfolio, has nearly doubled after its $US912 million IPO. Other firms that listed in the US last month as part of a boom in Chinese companies selling shares overseas include grocery services MissFresh Ltd and DingDong Cayman Ltd.

“It’s clear that there’s a regulatory overhang on China’s tech giants at the moment and that may continue to weigh on sector valuations for the large internet platforms,” according to Matthew Kanterman, an analyst at Bloomberg Intelligence.

Bloomberg