BEIJING, China — Beijing widened a crackdown on its
embattled technology sector Monday by announcing probes into two more US-listed
Chinese companies, a day after banning ride-hailing giant Didi Chuxing from app
stores following its huge New York initial public offering.
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The country's major internet firms wield massive influence
among its army of consumers, but have in recent months had their wings clipped
in a regulatory crackdown that has scuppered listings and hit business as the
government seeks to rein in their influence.
The latest targets are newly listed companies Full Truck
Alliance — a merger between truck-hailing platforms Yunmanman and Huochebang — and
Kanzhun, which owns online recruitment platform Boss Zhipin.
"The overarching message here from regulators is, you
need to have your house in order domestically before listing abroad," said
Kendra Schaefer, head of tech policy research at Beijing-based consultancy
Trivium China.
The three platforms have been told to stop new user
registrations during the investigation "to prevent security risks to
national data, safeguard national security and protect public interest",
the Cyberspace Administration of China (
CAC) said.
Hours earlier, the watchdog ordered the removal of Didi from
app stores following a similar probe, which it said found the firm's user data
collection and use in "serious violation" of regulations. It also
cited national security for the probe, an unusual move against a domestic tech
firm.
However, there were few details on the probe or Didi's
alleged violations.
Didi has pledged to rectify any problems, and said that the
takedown "may have an adverse impact on its revenue in China."
The move does not prevent existing users from booking
through Didi, but throws a wrench in the company's growth plans after its
bumper New York IPO last week raised $4.4 billion, one of the biggest in the US
over the past decade.
The investigation was announced just after
China wrapped up
tightly-choreographed celebrations for the centenary of its ruling Communist
Party.
It also comes at a time of heightened tensions between
Beijing and Washington with the tech sector a key issue of disagreement.
Dubbed China's Uber, Didi was founded just nine years ago by
former Alibaba executive Cheng Wei. It has gone on to dominate the country's
ride-hailing market after winning a costly turf war against the US titan
in 2016 and taking over Uber's local unit.
Shifting landscape
It now claims more than 15 million drivers and nearly 500
million users, with services available in 16 countries, including Russia and
Australia.
But its rise also comes amid what Kevin Kwek, senior analyst
on Asian financials at Bernstein, called a clear "trend towards tightening
on tech".
Chinese tech companies fell in Hong Kong Monday as investors
assessed the situation, with e-commerce platform Meituan down 5.6 percent,
Alibaba dropping nearly three percent and Tencent — which has a stake in Didi —
sliding 3.6 percent.
Tokyo-listed SoftBank, which has a 21.5 percent stake in the
firm, plunged 5.4 percent.
Didi, with a near monopoly on ride-hailing, is "the
most high profile cyber security case" of its kind, University of Hong
Kong law professor Angela Zhang told AFP.
But the action was lauded by state-run Global Times, which
said the country must not allow "any internet giant to become a super
database of Chinese personal information even more detailed than the
state."
A top Didi executive took to social media over the weekend
to rebuff rumors the firm had been sharing domestic data with the United
States, calling it "absolutely impossible".
Last year, authorities pulled the plug on a planned record
$34 billion IPO by Alibaba's financial arm Ant Group, before launching an
anti-monopoly probe into the tech behemoth.
That marked a dramatic fall from grace for Alibaba's founder
Jack Ma, who has gone from being the darling of China's internet entrepreneurs
to becoming virtually silent.
And the rapidly shifting landscape for tech is fuelling
uncertainty, with recent moves "very damaging for perceptions of the
predictability and stability of China's regulations", said Martin
Chorzempa, a senior fellow at the Peterson Institute for International
Economics, a Washington-based think tank.
"They also illustrate that IPOs are dangerous in China,
drawing regulator scrutiny to a successful firm," he added.
"Disclosures in IPOs give a sense of the scale of these
firms in ways that otherwise would never be known to the public and much of the
bureaucracy."
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