In late June, Didi, the Chinese ride-sharing giant, disclosed its initial public offering (IPO) pricing for the Western market. With its dominant presence in China and backing from major tech players, Didi’s IPO seemed like a promising investment. However, a longstanding issue has now come to the forefront, significantly impacting its market value.
The Chinese Cyberspace Administration visited Didi’s offices to conduct a thorough review of its cybersecurity practices. Didi has been under increasing scrutiny by the authorities, culminating in this latest investigation over alleged unauthorized collection of user data. Subsequently, Didi’s app was removed from Chinese app stores during the review, and new user registrations were temporarily halted.
Chinese regulators, including the Cyberspace Administration and the Ministry of Public Security, are inspecting $DIDI.
— TheStreet (@TheStreet) July 16, 2021
The intensified scrutiny has led to a 7% drop in Didi’s share price in pre-market trading on Friday. Regulators had previously cautioned Didi to postpone its IPO until it ensured compliance with cybersecurity standards. To list in the US, Didi would need to adhere to US cybersecurity regulations and potentially undergo audits, prompting Chinese authorities to prioritize the security of the company’s data.
