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China’s cybersecurity regulators have launched an investigation into Didi, and have sent the group’s shares plummeting on the third trading morning in New York.
China’s Cyberspace Administration made the sudden announcement on Friday evening, Beijing time, two days after Didi raised at least $ 4 billion largest initial public offering of the year.
Despite raising fundraising records, Didi kept the occasion unobtrusive, without holding it on his national social media channel Weibo, or holding a press conference or participating in a call ceremony in New York.
The CAC said the research was aimed at “safeguarding national data security and protecting national security” and that Didi should stop registering new users for the duration of the investigation in order to “fulfill the research work cybersecurity and prevent the spread of risks “. ”.
Didi told the Financial Times that he would “actively comply” with the investigation and “fully inspect our cybersecurity risks under the direction and supervision” of the authorities. Its shares opened 11% on Friday morning on trading in New York.
“This is a signal to large technology companies, which warns them of the importance of data security and personal data protection,” said Wang Congwei, a partner at Beijing Jingshi’s law firm.
China’s cybersecurity reviews are new measures launched last year to protect what it considers “critical information infrastructure,” a broad category that includes transportation providers and large-scale database systems. One of its goals is to prevent the leakage of critical information data.
Under Chinese regulations, an ordinary investigation can last up to 30 working days, with extensions of an additional 15 working days for complex cases.
Didi has more than 377 million users and 13 million active drivers in China annually, meaning it stores a significant amount of user data that could make Chinese regulators consider it a critical information infrastructure.
The platform not only collects data on travel and user locations, but, after a passenger security scandal in 2018, also record audio during each walk.
The company has not yet faced a major publicly known data leak. Following the 2018 passenger killings, police and traffic regulators reprimanded Didi for not sharing more data, a debacle that underscores tensions in Chinese government departments between demands for more data sharing and the need for greater data security.
Along with other traveling companions, Didi was called by market regulators in May and was told to deal with high driver costs and arbitrary price changes.
Additional reports from Nian Liu
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