Following a $2.8 billion fine against Alibaba, Chinese regulators are reportedly considering an even harsher penalty against ride-hailing giant Didi.
Didi’s decision to push ahead with its New York listing despite suggestions by the Cyberspace Administration of China (CAC) against the move is now being viewed as a challenge to Beijing’s authority, according to a «Bloomberg» report citing unnamed sources.
Potential penalties being considered include fines, suspension of certain operations, the introduction of a state-owned investor or even a forced de-listing.
Talks are still in the early stages with no conclusive decision on outcomes though the report said that Didi is expected to face tougher punishments than fellow mainland tech giant Alibaba, which was fined $2.8 billion following an anti-trust probe.
Scrutiny on CAC
According to the report, the CAC is also coming under scrutiny over why they hadn’t blocked Didi’s IPO, though previous reports also note that data security checks were not yet institutionalized as part of listing procedures. Regulators did not explicitly forbid a U.S. listing but they urged Didi to ensure the security of data prior to IPO or shift its IPO location to Hong Kong or mainland China where disclosure risks were lower.
Issues expressed by regulators include concerns about data security practices such as disclosure of statistics on taxi trips taken by government officials.
Officials from the CAC, the Ministry of Public Security, the Ministry of State Security, the Ministry of Natural Resources, alongside tax, transport and antitrust regulators, kicked off on-site investigations at the company’s offices, according to a statement.
