China’s cyber watchdog said Friday it is investigating homegrown ride-hailing giant Didi Chuxing over “cybersecurity” concerns, a day after the company raised more than $4.4 billion in a bumper New York IPO.
The announcement comes as China’s tech giants – including Alibaba, Tencent and Meituan – have been swept up in a regulatory crackdown by government authorities fearful of their supersized influence on consumers.
“To prevent security risks to national data, safeguard national security and protect the public interest … the Cybersecurity Investigation Office is … carrying out a cybersecurity investigation on Didi,” the Cyberspace Administration of China said in an online statement.
It did not elaborate on what national security risks were posed by Didi, but said that new users cannot register for the service during the investigation period.
Didi told Chinese media it would “actively cooperate” with the investigation.
The app – which claims to have more than 15 million drivers and nearly 500 million users – is often the easiest and quickest way to call a ride in crowded Chinese cities.
Founded in 2012 by Cheng Wei, a former executive at Chinese e-commerce giant Alibaba, the app has dominated the local ride-hailing market since it won a costly turf war against US titan Uber in 2016.
Didi is the latest Chinese tech unicorn to be targeted by authorities after Alibaba’s fintech arm Ant was forced to halt its record-breaking IPO last November as regulators grew concerned with monopolistic practices in the sector.
Alibaba was hit with a record $2.8 billion anti-trust fine in April, while 10 other internet firms – including its competitors Tencent and Didi – were fined 500,000 yuan each for anti-trust offenses in the same month.
By the close of US trading Thursday, Didi had a market cap of more than $68 billion at $16 per share, well over the $14 IPO price.