China to end year-long probe into ride-hailing giant Didi with $1 billion fine

July 19, 2022 0 Comments

Chinese authorities are preparing to impose a fine of more than $1 billion on ride-hailing company Didi, bringing an end to a yearlong cybersecurity-related investigation into the company, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

According to the report, once the penalty is announced, the government intends to lift a restriction that prevents Didi from adding new users to its platform and enables its mobile applications to be restored to domestic app stores. The fine will also pave the way for Didi to launch a listing in Hong Kong.

The $1 billion fine would account for about 4% of Didi’s $27.3 billion total sales last year.

Didi has become a high-profile target of the Chinese government’s crackdown on the country’s internet industry. Shortly after its listing on the New York Stock Exchange in late June 2021, China’s cyberspace regulator launched an investigation into it, citing data security. Didi’s app was subsequently removed from the app store and new users were banned from signing up. 

As part of an effort to win regulatory approval, Didi ended an 11-month listing on the New York Stock Exchange in early June. Didi’s shares, which were previously traded as American depository receipts (ADRs), moved to the over-the-counter market (OTC) in the U.S.

The OTC market refers to the trading of securities outside the major exchanges. Companies that trade on the OTC market don’t have to give out as much information as companies that trade on major exchanges.

Regulators are easing their crackdown on the tech sector as China’s economic growth slows in recent month. In late June, Chinese authorities allowed logistics platform Full Truck Alliance and online recruitment startup Kanzhun to resume user registrations. Both were hit with cybersecurity probes at the same time as Didi.

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