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Didi says removing the app may hurt revenue, other US-listed Chinese companies investigated.

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BEIJING – Didi Global Inc said a regulatory order for its app to be removed from app stores in China could hurt revenue, while other Chinese companies recently listed in the US are also subject to cybersecurity investigations.

Sunday’s takedown order from the China Cyberspace Administration (CAC) comes just two days after the regulator announced an investigation into the private transportation giant and less than a week after the company debuted on the stock exchange. New York Stock Exchange.

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It also comes amid widespread regulatory tightening on domestic tech companies, focusing on anti-competitive behavior and data security, which began with the disappearance of a $ 37 billion listing planned by subsidiary Ant Group. fintech company from Alibaba, late last year.

“Both the cancellation of Ant’s IPO and this action on Didi show that IPOs can be very dangerous in China, shedding light on the scale of one and the operations that invite regulatory scrutiny,” said Martin Chorzempa, principal investigator at Peterson. Institute for International Economics.

On Monday, the CAC announced investigations into online contracting company Zhipin.com and passenger transport companies Huochebang and Yunmanman, which merged to form the Full Truck Alliance. Like Didi, the owner of Zhipin.com, Kanzhu Ltd, and Full Truck Alliance went public on the US charts last month.

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The CAC said it had ordered app stores to stop offering Didi’s app after discovering that the company had illegally collected personal data from users.

“The company expects that the removal of the app could have an adverse impact on its revenue in China,” Didi said in a statement, but did not elaborate on the potential extent of the impact.

Analysts have said they don’t expect a big impact on earnings as Didi’s existing user base in China is so large. Removing the application does not affect existing users.

Didi also said that it will endeavor to rectify any issues and protect the privacy and security of user data.

Didi is also the subject of an antitrust investigation by China’s market regulator, the State Administration for Market Regulation, sources told Reuters last month.

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In a June filing, Didi reported revenue of about 42.2 billion yuan ($ 6.5 billion) for the three months ended March 31. Of that, 39.2 billion yuan came from its China mobility division, while around 800 million yuan came from its international business.

In addition to its dominant position in the Chinese private transport market, Didi operates in 15 other countries.

The Global Times, a tabloid published by the ruling Communist Party’s official People’s Daily newspaper, said Monday that Didi’s apparent “big data analytics” ability could pose risks to users’ personal information.

“No Internet giant can be allowed to become a super database of personal information of the Chinese people that contains more details than the country, and these companies cannot use the data however they want,” he said in an op-ed. .

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Didi shares lost 5% last Friday following the news of the CAC investigation, giving it a market value of $ 75 billion.

In its initial public offering prospectus, Didi said that “we follow strict procedures in the collection, transmission, storage and use of user data in accordance with our data privacy and security policies.”

A top Didi executive said on Saturday that the company stores all of China’s road and user data on servers in the country and that “it is absolutely not possible” that it has passed data to the United States.

SoftBank Group Corp, whose Vision Fund unit has stakes in both Didi and Full Truck Alliance, saw its shares fall 5% in Tokyo on Monday.

($ 1 = 6.4721 Chinese yuan) (Information from Tony Munroe and Yilei Sun in Beijing; Additional information from Aakriti Bhalla in Bengaluru, Scott Murdoch in Hong Kong and Sam Nussey in Tokyo; Edwina Gibbs edition)

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In-depth reports on the economics of innovation from The Logic, presented in association with the Financial Post.

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