A regulatory order from the Cyberspace Administration of China (CAC), has ordered all app stores in China to take down the mobile app of ride-hailing giant Didi Global Inc. This development comes on the heels of the company’s debut in the New York Stock Exchange and an investigation by the aforementioned authority into the company’s operation.
For quite some time now, Chinese authorities have been holding crackdowns that have gravely affected the cryptocurrency and tech space. Big companies like Alibaba were not left out of this widespread regulatory dyspnea by Chinese authorities.
According to the Cyberspace Administration of China (CAC) – the regulatory body that issued the ban against Didi, the ride-hailing giant was found guilty of dire violations in how the personal information of users was collected and used. The regulatory body, in a statement, required Didi to rectify these problems and also said that Didi was not to accept new customers until it completes its probe.
Commenting on the development, Martin Chorzempa – a senior fellow at the Peterson Institute for International Economics said that “both the Ant IPO cancellation and this action on Didi show that IPOs can be very dangerous in China, shedding light on one’s scale and operations that invite regulatory scrutiny”.
Didi raised $4.4 billion from investors from its New York stock listing about a week ago and has a market value of $75 billion. Didi shares fell 5.3 percent after the announcement by the Cybersecurity Administration of China (CAC) that it plans on reviewing the company.
With the ban, all app stores in China are to take down Didi’s app which translates to not being able to welcome new customers. Customers who, however, already have the app can keep on accessing Didi’s services, the company announced via social media.
Without elaborating, Didi mentioned that it will comply with the regulatory rules. The company also mentioned that it expects that “the app takedown may have an adverse impact on its revenue in China”. According to analysts, the app takedown should not affect the company’s earnings by much as its user base in China is large. They also believe that since the ban does not restrict existing customers, it shouldn’t be a major hit on the company’s revenue.
Founded in 2012, Didi is operational in more than 15 countries and reported $6.5 billion as revenue for the first quarter of this year.