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China cracks down on ride-hailing giant Didi, accuses firm of leaking data to US

Didi logo

Communist China’s crackdown on Big Tech continues with ride-hailing giant Didi now facing an investigation for allegedly leaking user and roads data to the USA.

Ominously, the investigation comes after Didi raised $4.4 billion from its initial public offering (IPO) in the New York stock exchange. Didi's debut on US stock market on Wednesday was the biggest by a Chinese company since Alibaba Group Holding Ltd in 2014.

The crack down on Jack Ma’s Alibaba group had come just ahead of the company listing its fintech arm on the US stock exchange for what was to be a $ 37 billion IPO last year. However, in the case of Didi, investors in its IPO have been caught by a bolt from the blue with the investigation being announced just two days after the company started trading on the US stock exchange sending the price of newly bought shares tumbling down.

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China's cyberspace agency announced on its website on Friday that it had launched an investigation into Didi to protect national security and the public interest. It also said that ride- ailing company was not allowed to register new users during its investigation, according to a Reuters report from Beijing.

However, Didi denied the charge. "Like many overseas-listed Chinese companies, Didi stores all domestic user data at servers in China, it is absolutely not possible to pass data to the United States,"  Didi vice president Li Min said in a post on Weibo.

Li also said the company would sue any social media users who said the company transferred data during its recent initial public offering (IPO) process after claims were made on China's popular micro blogging platform Weibo.

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Didi, which offers services in China and more than 15 international markets, gathers vast amounts of data every day in the course of running its business.

Founded by Will Cheng in 2012, the company said on Friday it planned to conduct a comprehensive examination of cybersecurity risks and would cooperate fully with the relevant government authority. In a stock market filing, Didi said that apart from the suspension of new user registrations in China, it was operating normally.

Chinese internet regulators have tightened rules for the country's tech giants in recent years, laying down strict rules for companies to collect, store and handle data.

The Chinese authorities have also been accusing Big Tech companies of anti-competitive behaviour and denying smaller players a level playing field.

Alibaba founder Jack Ma, at one time the poster boy of the new China, had been put in place for publicly criticising top Chinese officials. President Xi Jinping is reported to have given the go-ahead to torpedo the planned record $37 billion public listing of Alibaba’s fintech arm, Ant Group. It was later fined $2.8 billion for breaching anti-monopoly rules.

The Chinese e-commerce giant had fallen in line saying, “It is not lost on us that today’s society has new expectations for platform companies, as we must assume more responsibilities as part of the nation’s economic and social development.”

Similarly, another Chinese magnate Pony Ma, founder of media conglomerate Tencent Holdings, which runs popular messaging app Wechat, was also summoned by the authorities over antitrust compliance issues.