Didi, all the troubles of the Chinese Uber
A few days after Didi's IPO in the United States, Beijing authorities ordered the ride sharing group to be removed from Chinese app stores. The Chinese squeeze on the most successful technology businesses continues
China hits one of its largest tech companies.
A few days after the initial US public offering, Chinese regulators stopped domestic downloads of the Didi ride sharing app yesterday.
Two days earlier, the Cyberspace Administration of China (CAC) announced it was investigating the company to protect "national security and the public interest," prompting Didi's shares to drop 5.3%.
The Chinese company raised $ 4.4 billion in the IPO, in what was the largest listing in the United States by a Chinese company since Alibaba's debut in 2014.
For now, the app's 600 million existing users and drivers can continue to use Didi as normal, as long as they have already downloaded the app. But new customers won't be able to start using the service until the company fixes the data issues.
After Didi, Beijing also launched data security investigations for three other Wall Street-listed technology companies, including a van booking and a job agency.
Didi's troubles come against the backdrop of a wider squeeze on Chinese technology by regulators in the country.
All the details.
THE FINISHED APPS IN THE SIGHT OF CHINESE AUTHORITY
The Cyberspace Administration of China (Cac), the internet supervisor in China, has announced that it has stopped registering new users for Yunmanman and Huochebang, known in China as the "Truck Uber", and for the platform for the recruitment of Boss Haiping personnel "in order to prevent national data security risks, maintain national security and protect the public interest".
Full Truck Alliance, which controls Yunmanman and Houchebang, and Kanzhu, owner of Boss Haiping, went public on Wall Street last month.
VIOLATIONS
Without mentioning specific violations, the CAC mentioned in the note the law on national security and that on cyber security. The authority announced it was taking action based on cyber security review measures.
THE NARROW REGULATION OF BEIJING
The download ban comes in the context of a wider crackdown on the power of major tech platforms in China. As for the tech giants Alibaba and Tencent, which this year faced antitrust scrutiny.
There is stricter scrutiny now both inside and outside China over Chinese tech companies. Not to mention that last November, regulators blew up the record $ 37 billion IPO of Ant Group, Alibaba's fintech arm.
THE REMOVAL OF DIDI
Just yesterday, the internet supervisor in China announced the removal of Didi Chuxing's app from the app stores, just two days after the launch of data security investigations last Friday, which had caused the share's value to plummet. on Wall Street.
The CAC has ordered all app stores in the country to block downloads of Didi Chuxing.
THE ILLEGAL
The Cyberspace Administration accused Didi of having improperly collected and used the personal data of its customers.
FOLLOWING THE IPO
Beijing announced a ban on downloads just days after Didi completed an initial $ 68 billion public offering on the New York Stock Exchange.
THE DROP IN THE TITLE
When the CAC announced on Friday that it was investigating Didi, the company's shares lost 5.3% on Wall Street.
THE COMPANY'S POSITION
"Didi will fully cooperate with the relevant government authority during the review," the company replied in a statement.
"The company will work to correct any problems, – continues the Chinese company in the note – improve awareness of risk prevention and technological capabilities, protect the privacy and security of user data and continue to provide safe and convenient services to its customers. users ".
THE IMPACT ON DIDI'S ACCOUNTS
However, the download ban will not benefit the company's pockets.
"The company expects the removal of the app to negatively impact its revenue in China," Didi added.
THE CONSEQUENCES FOR UBER
As Quartz points out, Didi's fate will also affect the fortunes of its biggest rival, Uber. The US ride share giant owns a 12% stake in Didi. This means that any fluctuations in the Chinese company's valuation could mean hundreds of millions of dollars of difference in Uber's business.
As happened to SoftBank, the Japanese conglomerate whose Vision Fund unit holds stakes in both Didi and the Full Truck Alliance, which saw its shares drop 5% in Tokyo on Monday.
THE ANTITRUST INVESTIGATION ON DIDI
Didi currently has a current market value of around $ 75 billion, but it is also the subject of an antitrust investigation by China's market regulator, the State Administration for Market Regulation, according to reports from sources to Reuters last month.
THE COMMENT OF THE ANALYSTS
Redex Research Director Kirk Boodry said the move by the Cyberspace Administration of China appeared "aggressive". "It indicates the process may take some time, but the apps in question have a large user base, so the short-term impact will likely be mitigated for now."
"Both the cancellation of Ant's IPO and this action on Didi show that IPOs can be very dangerous in China, putting the spotlight on their operations and calling for regulatory scrutiny," Martin Chorzempa, senior fellow at Peterson, told Reuters. Institute for International Economics.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/didi-tutti-i-guai-delluber-cinese/ on Mon, 05 Jul 2021 13:18:57 +0000.