China dispatches officials to inspect Didi’s data security

A visitor checks an autonomous car developed by Didi at an auto show in Shanghai, China on April 19, 2021. The Chinese government on July 16, 2021 announced a cybersecurity investigation of ride-hailing service Didi, stepping up scrutiny after earlier criticism of its handling of customer information caused the company's New York-traded shares to tumble. — Chinatopix via AP

China has dispatched a team of officials to conduct on-site inspections at Didi Global Inc as part of a probe into the ride-hailing giant.

Officials from the Cyberspace Administration of China, Ministry of Public Security, Ministry of State Security, Ministry of Natural Resources, as well as the tax, transport and antitrust regulators are beginning an investigation into Didi’s data security, according to a statement released by the cyberspace watchdog Friday.

Days after Didi’s initial public offering in the US on June 30, the CAC announced the probe into Didi and ordered app stores to remove its services within China. The probe into Cheng Wei’s ride-hailing firm set off renewed scrutiny over China’s tech giants, which had already been under pressure from antitrust regulators over alleged abuses in areas like pricing and forced exclusivity, and expanded Beijing’s tech crackdown to include greater oversight over data and foreign IPOs.

Shares of Didi have dropped nearly 12% since its debut. The company twice warned of adverse impact on its business following the removal of its apps in China.

Under revised rules outlining the framework for cybersecurity reviews published earlier this month, inspectors would normally be required to conclude their probe within three months, though the process could be prolonged in complicated cases. Any firm with data on more than one million users will now need to undergo a review before seeking a listing in a foreign country, significantly tightening oversight over its internet giants and technology startups.

Companies going public in Hong Kong will be exempt, Bloomberg News reported Friday, removing one hurdle for businesses that list in the Asian financial hub instead of the US. All listings, including those in Hong Kong, will require a sign-off from the China Securities Regulatory Commission under the new framework, people familiar with the matter said. – Bloomberg