China’s sweeping crackdown on tech companies turns to ride-hailing giant Didi yet again. One aim is to prevent valuable data held by the tech giant from falling into US hands.
China ordered the removal from online stores of 25 apps operated by ride-hailing giant Didi, stepping up its crackdown on a company that listed in the US just nine days ago.
The apps used data that was illegally collected by Didi and included those for its delivery service, camera device and finance services, the Cyberspace Administration of China said in a statement. In a statement posted on its social media site, Didi said it would “resolutely obey’’ the order.
The latest measures come just days after Beijing suspended downloads of the company’s popular ride-hailing app, citing national security concerns as it moved to prevent data held by giant tech companies from falling into foreign hands. The crackdown was extended this week to two more companies that were recently listed in the US as Didi faced the threat of class-action lawsuits in the US over potential failures to warn investors about pending regulatory action.
CLASS ACTION
New York law firm Rosen announced this week that it is considering a class-action lawsuit against Didi. Its founder and managing partner Laurence Rosen told AF on Tuesday that there is a strong case against the Chinese ride-hailing giant.
“The recent announcement from the Chinese government that they had suggested Didi postpone their IPO strengthens the case substantially,’’ Rosen said. Didi, for its part, said it did not have any warning ahead of the suspension of downloads of its app in China.
Bankers say China’s stepped-up scrutiny of foreign-listed tech giants such as Didi is likely to reduce the number of companies seeking to launch IPOs in the US. That may boost Hong Kong’s allure as a fundraising venue for Chinese companies looking to avoid the new restrictions for listing in the US.
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