Beijing-based ride hailing app Didi Global’s shares fell more than 10 percent on the NYSE on June 2 after China broadened an internal probe into the company, blocking new users from signing up for the service.
China’s cyberspace agency claimed an inquiry into the company’s operations was initiated in order to defend national security and the general public’s interest.
Regulators later added issues such as antitrust and data security to the stack of accusations.
Didi Global’s data trove poses a threat to individual privacy and national security, Communist Party-backed Global Times said in a comment praising scrutiny of the Chinese ride-hailing app, “To protect personal data as well as national security, China must be even stricter in its oversight of Didi’s data security, given that it’s listed in the U.S. and its two largest shareholders are foreign companies.”
In its first prospectus, Didi set out some boilerplate rules it was expected to follow in China, such as “Strict procedures in collecting, transmitting, storing and using user data pursuant to our data security and privacy policies.”
The breakneck decision to impede Didi’s business operations came just two days after Party regulators announced an investigation into the company’s collection and usage of personal information.
Apple and Google were required to remove the app, inflicting a massive blow to one of the biggest U.S. IPOs of the last decade. The app is still usable to those who downloaded it before the crackdown.
China’s cyberspace regulator did not explain what exactly it will investigate. However, the timing of its statements was crucial, coming on the heels of Didi’s first public offering and the Communist Party’s centennial anniversary.
Didi told Reuters that it intended to undertake a thorough investigation of cybersecurity concerns and fully collaborate with the appropriate government body and take steps to protect the personal information of its users.