Days following DiDi’s initial public offering earlier this month, Chinese regulators started a cybersecurity review into the company.
As a reminder, China started to crack down on its tech giants following years of comparatively little regulation. After stating its DiDi probe, Chinese regulators also opened cybersecurity reviews into U.S.-listed Boss Zhipin and subsidiaries of Full Truck Alliance.
In June, Reuters listed that Chinese regulators were examining DiDi for antitrust violations. Beijing is also reportedly studying the company’s pricing mechanism.
DiDi warned in its IPO prospectus that dissatisfied regulators could punish it.
The Cyberspace Administration of China (CAC) also established app stores in China to eliminate DiDi from download, claiming the company had illegally collected users’ data. No original users can sign up.
Last week, authorities requested the further removal of 25 apps of DiDi from app stores.
DiDi’s regulatory dilemmas have left the door open for rivals to chip away at the company’s about 90% market share.
Last week, food delivery company Meituan re-launched a standalone ride-hailing app that was beforehand taken away by app stores in 2019.
As stated in an internal memo quoted by local media, another competitor called T3 plans to develop into 15 cities. T3 is a venture by three significant Chinese automakers. Technology giants Tencent and Alibaba own T3.
The company has been bootlegging ads on Tencent’s WeChat messaging service, which has above a billion users. Anyone who matches the ads gets discount coupons for using the service.
Regulators Toughen up Rules
Meantime, Cao Cao, a ride-hailing service managed by carmaker Geely, concedes substantial discounts for new clients on its service.
DiDi developed into the dominant player, with almost 500 million yearly active users. It did this through dynamic expansion over the years after buying out Uber’s China business in 2016. But, the company has been picked up in Beijing’s crackdown on its technology companies, especially as regulators toughen up rules on data security.
Regulators are also contracting their oversight of any Chinese companies that desire to list overseas, like DiDi. On Saturday, the CAC stated that any company with more than 1 million users must experience a security review before carrying out a foreign share listing.