China extends cybersecurity probe into two US-listed tech firms after banning Didi Global

China on July 5 expanded its latest crackdown on the technology industry beyond Didi Global Inc. to include two other US-listed Chinese companies. According to Bloomberg, Beijing’s latest moves hit newly listed companies Full Truck Alliance - a merger between truck-hailing platforms Yunmanman and Huochebang - as well as Kanzhun, which owns the online recruitment platform Boss Zhipin. The country ordered all three companies to halt new user registrations and told app stores to remove Didi’s service from their platforms. 

According to the Cyberspace Administration of China, the move is to “prevent security risks to national data, safeguard national security and protect the public interest”. It comes just hours after the watchdog ordered the removal of Didi from app stores following a similar investigation, throwing a wrench in the company’s growth plans after a bumper New York IPO last week raised more than $4.4 billion. China’s administration issued the order on Didi after investigations found its user data collection and use in “serious violation” of regulations.

Now, 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.  

China’s crackdown on tech firms 

Post the ban from Chinese authorities, the company's valuation came crashing down with a 10 per cent 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’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)