Just days after IPO, China opens cyber probe against Didi; shares fall 10%

Didi Global’s shares fell more than 10 per cent in New York on Friday after China’s cyberspace agency said it had launched an investigation into the Chinese ride-hailing giant to protect national security and the public interest.

The Cyberspace Administration of China (CAC) said on its website that Didi was not allowed to register new users during its investigation, which was announced just two days after Didi began trading on the New York Stock Exchange.

Beijing-based Didi said in a statement to Reuters that it planned to conduct a comprehensive examination of cybersecurity risks and would cooperate fully with the relevant government authority.

Chinese internet regulators have tightened rules for the country’s tech giants in recent years, asking companies to collect, store and handle key data properly. The cyberspace agency did not offer details about its investigation into Didi, but said the investigation was also to prevent data security-related risks.

Didi, which offers a wide range of services in China and over 15 international markets, gathers vast amounts of real-time mobility data everyday. It uses some of the data for autonomous driving technologies and traffic analysis.

Didi laid out related regulations in China in its IPO prospectus and said “we follow strict procedures in collecting, transmitting, storing and using user data pursuant to our data security and privacy policies”.

Two investors, however, told Reuters that company executives did not discuss possible cybersecurity regulation with investors at the call they joined for Didi’s IPO roadshow.

Didi’s shares fell as much as 10.9% after the open and were down 5.67 per cent at 9.30 pm IST. “The near-term impact depends a lot on how long a review lasts but Didi has a large enough base that we aren't going to change our forecasts yet," Redex Research analyst Kirk Boodry said.