DiDi shares fell more than 5% Friday after China, where the company is based, announced a cybersecurity review of it. China announced it, and according to the English translation, this came forward. New users will not be able to register for DiDi’s service. They will not be able to participate during the country’s cybersecurity review.
This announcement by China came right after DiDi held its IPO on the New York Stock Exchange. It was, in fact, just 2 days after this event. This is indeed something that the company will be struggling with in the near future. It is too soon to tell about what their plan is but the initial shock does seem to have subsided a little bit by now.
DiDi said in a statement it would “fully cooperate” during the review. “We plan to conduct comprehensive examination of cybersecurity risks and continuously improve on our cybersecurity systems and technology capacities,” a spokesperson told CNBC in an email.
“We cannot assure you that the regulatory authorities will be satisfied with our self-inspection results or that we will not be subject to any penalty with respect to any violations of anti-monopoly, anti-unfair competition, pricing, advertisement, privacy protection, food safety, product quality, tax, and other related laws and regulations. We expect that these areas will receive greater and continued attention and scrutiny from regulators and the general public going forward,” the company said in its prospectus.
The announcement made by China is also a trend that had been seen with in the country with the crackdown going on. It was beginning with Bitcoin, and now it had reached DiDi. We are not sure what the future holds. We are just here to wait and watch what the country plans next.
Didi, along with several other Chinese internet businesses, met with regulators earlier this year, as foreshadowed in the company’s IPO prospectus. The taxi service warned that it could face fines if regulators were dissatisfied with the results of its inspections.
We cannot guarantee that the results of our self-inspection will be acceptable to the regulatory authorities or that we will not be fined for breaking laws and regulations pertaining to antitrust, unfair competition, pricing, advertising, personal information protection, food safety, product quality, taxes, and other similar areas.
The company stated in its prospectus that it anticipates increased and ongoing attention and scrutiny from regulators and the general public in these areas. Didi, which launched in 2012, claims to have 493 million active riders per year and 41 million transactions on average each day.
The company has been operating in 14 countries outside of China since it began its international expansion in 2018. Didi operates multiple mobility-related businesses, including the more familiar ride-hailing service as well as research and development of autonomous taxis.