In a regulatory decision taken on Sunday, the Cyberspace Administration of China announced the ban on DiDi Chuxing, a vehicle for hire company with over 550 million users.
The administration called for the app to be removed from app stores operated by Apple Inc., Huawei Technologies Co. as well as Xiaomi Corp.. This comes amidst allegations that the company has been violating the use of personal data without elaboration.
Nevertheless, the current half-a-billion or so users can continue to use DiDi's services so long as they downloaded the app before Sunday. Since the investigation took place, shares in SoftBank Group Corp., DiDi's major shareholder, dropped by 5.9% on Monday. whilst one of their major backers, Tencent Holdings Ltd. lost close to 11% of its market share on Friday.
The regulator ordered DiDi to rectify their antitrust and data security issues to meet legal requirements and national standards. Measures must be taken to protect the personal information of its users as well.
Following the investigation, a statement issued by DiDi suggested the regulatory move could have an "adverse impact" on its revenue in China.
The investigation's timing is pivotal as it came at the crux of Didi's IPO, which was handled by Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.
The move also emphasises the Chinese government's crackdown on the internet sector. Brock Silvers, chief investment officer at Kaiyuan Capital, a private equity firm in Hong Kong stated, "this is deeply unfair to investors" and "China's regulators should cease allowing companies to list while under investigation".
Published 5th July 2021 | 12:22