Didi shares have fallen sharply (5.02%) in the stock market during the day this Friday after the announcement by China, where the company is based, that perform a cybersecurity review.
According to the announcement from China, new users will not be able to register for the Didi transport service during the country’s cybersecurity review.
China’s move comes just two days after Didi to celebrate its IPO on the New York Stock Market. The company’s shares were poised for another earnings day after closing up nearly 16% on Thursday. In fact, they were up about 5% in pre-market trading before China released the information.
Following the announcement, Didi said in a statement that it will “cooperate fully” during the review.
“We plan to carry out a comprehensive review of cybersecurity risks and continually improve our cybersecurity systems and technology capabilities, “a spokesperson told CNBC in an email.
China’s announcement also reflects a broader trend of the country’s regulatory measures against tech companies based in its territory that until now were little regulated.
In June, . reported that Chinese regulators were investigating Didi for antitrust violations. Beijing is also reportedly investigating the company’s pricing mechanism.
Also, last fall, Ant Group’s public offering for sale (IPO) in Shanghai and Hong Kong delayed after Chinese regulators stepped in and interviewed the company’s top executives, including the company’s president, Jack Ma. In April, regulators fined Alibaba nearly $ 2.8 billion, alleging that the company had abused its dominance of the market.
Didi had warned in his IPO prospectus that had met with regulators earlier this year, along with other Chinese Internet companies. The trucking company said you could be subject to sanctionsas regulatory bodies may not be satisfied with the results of the inspection.
“We cannot assure you that the regulatory authorities are satisfied with the results of our self-inspection or that we will not be subject to any sanction with respect to any violation of antitrust laws and regulations, unfair competition, prices, advertising, privacy protection, food safety, product quality, taxes and others related. We hope that these areas receive increased and continued attention and scrutiny by regulators and the general public going forward, “the company said in its prospectus.
Founded in 2012, Didi claimed that it has 493 million active jockeys annually, and 41 million average daily transactions. It began to expand internationally in 2018, and the company now operates in 14 countries outside of China. In addition to traditional transportation, Didi is investing heavily in make autonomous taxis a reality and operates in various segments around mobility.