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Updated July 6th, 2021 at 13:10 IST

China asked ride-hailing giant Didi to delay its $4.4 billion US IPO: Report

China’s cybersecurity watchdog had urged ride-hailing company Didi Chuxing to delay its $4.4 billion New York IPO in a bid to examine security concerns.

Reported by: Bhavya Sukheja
China
IMAGE: AP/ANI | Image:self
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China’s cybersecurity watchdog had urged ride-hailing company Didi Chuxing Technology Co., to delay its $4.4 billion New York IPO in a bid to examine security concerns, Wall Street Journal reported. Didi was banned from app stores on Sunday by the Cyberspace Administration of China (CAC) and it now faces a probe over unspecified national security issues. As per reports, weeks before the bumper initial public offering, Chinese regulators had attempted to dissuade Didi from going ahead with it and urged the company to launch an internal security probe. 

However, the industry giant, dubbed China’s Uber, went ahead with last week’s listing, which was one of the biggest in the US for a decade. The Wall Street Journal reported that officials were “wary of the ride-hailing company’s troves of data potentially falling into foreign hands” owning to public disclosure around its listing. Therefore, the CAC launched an investigation into Didi, just two days after the company began trading on the New York Stock Exchange. 

China’s scrutiny of Didi is the latest move in a wider crackdown on major US-listed tech firms. The move was followed by the announcement of a review of truck-hailing platform Full Truck Alliance and the owner of popular online recruitment site Boss Zhipin. On Monday, all three platforms were told by the CAC to stop registering new users "to prevent security risks to national data, safeguard national security and protect public interest".

App takedown may have ‘adverse impact’ 

The CAC further gave very little details, however, Didi pledged to rectify any problems and said the takedown "may have an adverse impact on its revenue in China". In a statement, the company speculated adverse of the takedown but stopped short of elaborating on the extent of the potential impact. However, experts have opined otherwise reckoning that Didi Global already has a massive user base in China and app removal would have little or no effect on its earnings.

Meanwhile, 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’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. 

(Image: AP/ANI)
 

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Published July 6th, 2021 at 13:10 IST

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