Didi falls as Chinese officials send police to offices as part of sweeping cybersecurity probe

A receptionist wearing a mask looks up from a desk at Didi office in Beijing.
A receptionist looks up from an office for drivers of Didi in Beijing.

  • Didi shares dropped Friday after police and other regulators went to the ride-hailing app operator’s offices in Beijing.
  • The Chinese government sent a task force of seven units including the internet regulator for the on-site visit as part of a cybersecurity review.
  • Didi shares have slumped in the wake of the review, which was first launched earlier this month.
  • See more stories on Insider’s business page.

Shares of Didi dropped Friday after reports that police in China went to the offices of the ride-hailing company as part of a cybersecurity review that was launched just after Didi raised $4.4 billion in an initial public offering in New York.

A task force of seven ministries including the national security and public security ministries and the Cyberspace Administration of China entered Didi’s offices on Friday to conduct what is China’s first cybersecurity review, according to the South China Morning Post.

NYSE-listed shares of Didi fell 3% during the regular session after losing as much as 8.6% in premarket trade.

The on-site visit is part of what Chinese officials have said are efforts to prevent national data security risks and to maintain national security. The Cyberspace Administration of China, the country’s internet regulator, last week ordered online stores to pull Didi’s apps after determining the apps used data that was collected illegally by Didi.

Didi said two weeks ago when the probe was launched that it would cooperate. The review triggered a selloff, and the stock through Thursday had dropped by more than 12% since its June 30 IPO. Didi was worth as much as $68 billion following its trading debut, making it one of the biggest IPOs in the US in the last 10 years.

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TikTok owner ByteDance has reportedly canceled its upcoming IPO as China cracks down on tech companies

TikTok app
  • TikTok’s owner ByteDance held off on offshore IPO plans after talks with Chinese officials, The Wall Street Journal reported.
  • ByteDance’s founder indefinitely shelved the plans in March.
  • China launched a security review of Didi two days after the ride-hailing app went public in the US in June.
  • See more stories on Insider’s business page.

ByteDance, the Chinese company that runs the popular short-form video app TikTok, will hold off on plans for an offshore listing after Beijing authorities told the company to address data-security risks, according to The Wall Street Journal.

ByteDance made the decision in March to postpone its intentions of offering all or a portion of its businesses in the US or Hong Kong, the report published Monday said, citing sources familiar with the matter. The company was valued at $180 billion in a round of funding in December.

The report follows cybersecurity reviews of ride-hailing service Didi and on two other companies by Chinese regulators shortly after shares of those companies began trading in the US. China has been clamping down on technology companies over a range of issues including security and privacy and potentially anti-competitive behavior.

ByteDance’s founder, Zhang Yiming, decided to indefinitely shelve the IPO plans after meeting with cyberspace and securities regulators about focusing on risks related to data security and other items, WSJ reported.

Beijing has concerns that data collected by tech companies in the country could be compromised through disclosures linked to U.S. listings. Chinese authorities, meanwhile, are considering a rule change that would allow them to stop domestic firms from listing publicly in overseas markets, according to a Bloomberg report last week. The loophole has previously been used by Chinese tech giants like Alibaba and Tencent to launch IPO in the US.

Didi on Monday warned of a likely hit to its revenue after a regulator ordered the removal of 25 apps from online stores, Reuters reported. The Cyberspace Administration of China last week said Didi was in violation of data-gathering rules. Didi’s stock began trading on the New York Stock Exchange on June 30 and the cybersecurity review was announced two days later. The shares have lost roughly 20% since then and were pressure during Monday’s session.

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