China Tightens "National Security Threat" Clampdown on New York-Listed Didi Chuxing

Photo by Reuters

[Asia Economy Reporter Yujin Cho] Chinese authorities have instructed app market operators to remove the app of Didi Chuxing, China's largest ride-sharing company listed on the New York Stock Exchange. Considering that previous regulatory logic against big tech companies was based on antitrust violations, the investigation reason citing national security threats is highly unusual.

According to The Wall Street Journal (WSJ) and Bloomberg News, the Cyberspace Administration of China (CAC) ordered app marketplaces such as Google Play Store to remove the Didi Chuxing app due to serious violations of personal information collection and usage regulations.

This action came just two days after CAC announced the start of a security investigation into Didi Chuxing. CAC stated the investigation reason as "preventing national data security risks, safeguarding national security, and ensuring public interest" based on the National Security Law and the Cybersecurity Law.

Some speculate that Didi Chuxing could face a more severe crisis than e-commerce giant Alibaba. The regulatory logic previously used by Chinese authorities against big tech companies like Alibaba and Tencent was based on antitrust issues or the expansion of shadow banking.

Foreign media have noted that the investigation reason cited by Chinese authorities this time is national security threats rather than antitrust violations.

When Chinese authorities first launched the investigation into Didi Chuxing in April, the reason was alleged antitrust violations. At that time, authorities said the investigation focused on whether Didi Chuxing, which holds 90% of the Chinese ride-sharing market, unfairly pressured smaller competitors and whether its pricing system was transparent.

WSJ interpreted the recent move by authorities as targeting "Didi Chuxing" itself, noting that it came right after Didi Chuxing raised about $4.4 billion through its listing on the New York Stock Exchange (NYSE), indicating that the investigation is not simply about cybersecurity or antitrust issues.

This is interpreted as a sign that Chinese authorities, feeling threatened by the rapid growth of Chinese big tech companies escaping the control of the Chinese Communist Party, have begun to intensify their tightening regulations. Didi Chuxing, with a market capitalization of $72.9 billion (as of closing on the 2nd), the largest IPO in the market, has drawn significant ire from the Chinese government by choosing New York over mainland China or Hong Kong stock exchanges.

On the New York Stock Exchange, Didi Chuxing's stock price rose more than 15% on the 1st but closed at $15.53 on the 2nd, down 5.3% after the investigation news broke.

Didi Chuxing is a company specializing in ride-sharing services that dispatches the nearest affiliated taxi or private car through a mobile app, holding nearly 90% market share in China and is called the "Chinese Uber." Major investors include SoftBank, Alibaba, and Tencent.

This content was produced with the assistance of AI translation services.