Didi Plans to Relaunch Apps as Probe Nears End, Reuters Says
Didi Plans to Relaunch Apps as Probe Nears End, Reuters Says
(Bloomberg) -- Didi Global Inc. is preparing to reintroduce its apps in China by the end of the year as regulators wrap up their investigations into the ride-hailing giant, Reuters reported, citing people with knowledge of the matter.
The government is expected to finalize any penalties for the company by December, the news agency said. Didi has set aside 10 billion yuan ($1.6 billion) for a potential fine, the report cited the people as saying.
The information was hearsay and had no grounds in fact, Didi said in response to queries by Bloomberg News. It also added that it was cooperating with the cybersecurity review.
The Cyberspace Administration of China announced in July it was beginning an investigation into Didi and ordered the company to remove its services from Chinese app stores, just days after the company went public in the U.S. Authorities are weighing possibly unprecedented penalties for Didi after the company went ahead with its initial public offering despite regulatory concerns over the safety of the data it has collected, Bloomberg News has previously reported.
Didi has been making changes to its apps to ensure they comply with the new Personal Information Protection Law that took effect on Nov. 1, Reuters said. The relaunched apps will include an updated user agreement that clearly defines what data will be collected and how it will be used, one of the people said. The company is also working on new strategies to recruit drivers after losing many of them to rival services during the investigation, the report added.
Shares of Didi jumped 10% on Wednesday in New York trading, paring losses since its debut to 36%. The Hang Seng Tech Index rallied after the report, and was 2.3% higher as of 2:59 p.m. in Hong Kong.
A fine of as much as $1.6 billion would represent roughly 7% of Didi’s 2020 revenue. That compares with the record $2.8 billion penalty paid by Alibaba Group Holding Ltd. for antitrust violations, though that sum was just 4% of the larger company’s annual sales.
Regulators, who deemed Didi’s decision to go public as a challenge to Beijing’s authority, are considering a range of potential punishments, including a fine, suspension of certain operations or the introduction of a state-owned investor, Bloomberg has reported. Just days after the controversial IPO, the CAC proposed new rules that will require virtually all companies seeking a listing in other countries to undergo a cybersecurity review.
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