China bans Didi Chuxing taxi service over security breach claim days after US IPO

Few days after China's largest ride-hailing service, Didi rocked on the New York Stock Exchange by becoming one of the largest US IPOs in recent years, the Chinese authorities on Sunday banned the application. Reasoning the action, China’s cybersecurity regulator said that the app of posing a security threat as it improperly collected and used its customers’ personal data. Recently on June 30, Didi Global Inc (DIDI.N) shares had ended the first day of U.S. trading with over their initial public offering (IPO) price, valuing at $68.49 billion in the biggest U.S. listing by a Chinese company since 2014.

However, the existing 600 million users of the application and drivers customers can continue using Didi normally, so long as they have already downloaded the app. But new customers will not be able to start using the service until the company addresses the regulators’ data concerns. In response to the ban, application developers said that they will fully cooperate with the relevant government authority. 

Didi’s valuation suffers major loss

Post the ban from Chinese authorities, the company's valuation came crashing down with 10% downfall. Beijing has also announced an investigation into the company’s cybersecurity practices on July 2. Chinese authorities have banned Didi from registering any new users for the duration of the investigation. The ban comes after China imposed a broader crackdown on the power of major tech platforms in China, including Alibaba and Tencent, both of which faced antitrust scrutiny this year.

China halts Ant Group’s IPO

Recently, China’s financial regulators halted fintech platform Ant Group’s IPO in Hong Kong and Shanghai days before it was set to raise a record-breaking $37bn. Sources suggest that such moves from Chinese watchdogs can be seen as a sign of Beijing’s discomfort with overseas listings. The move also marks a fresh regulatory offensive on China’s tech groups, whose shares have suffered in recent months after Beijing’s market regulators enhanced their antitrust campaign. In April, Chinese authorities handed a record fine to Alibaba and warned 34 other companies to rectify their behaviour. 

This year a lot of Chinese companies have been rushing to list in New York before the US government implements new auditing requirements that may cause Chinese companies to be delisted.