Explainer | Why is Didi’s cybersecurity review important and what will it mean for the ride-hailing giant’s future?
- Didi is the first Chinese tech company to face a probe by China’s cyberspace administration on national security grounds
- Worst case scenario for Didi is that damage could go much deeper than fines, experts say
The cyberspace security review office, an obscure unit of the powerful Chinese Administration of Cyberspace (CAC), on Friday announced a probe into Didi Chuxing on national security grounds, two days after the ride-hailing giant made its initial public offering in New York.
This was followed by another statement on Sunday in which CAC said it had ordered app stores to remove Didi from their platforms. On Monday morning, the cyberspace security review office said it was launching a similar investigation on “national security” grounds into truck-hailing apps Yunmanman and Huochebang, as well as a recruiting app operated by Boss Zhipin.
While many key questions remain unanswered, including more details on the transgressions by Didi and other apps, the probes have opened another front in Beijing’s ongoing scrutiny of the country’s technology giants, and added a new layer of uncertainty for Chinese tech firms seeking a listing in the United States.
Below are some key takeaways about the probe based upon official statements, laws and expert views:
Why is the cybersecurity review of Didi important?
It is the first time in China that the cyberspace security review office, which was created last year as a coordination agency among 12 ministries, has shown its teeth to a major domestic technology company.
It is different from previous antitrust or pricing investigations into Big Tech in China: the regulator in charge of the Didi investigation is the cyberspace security review office, not the State Administration for Market Regulation, and the probe into Didi is about national security concerns, a more serious issue than monopolistic behaviour and pricing irregularities.
