Days after China targeted its home-grown tech giants that are listed on US Stock exchanges, ride-hailing service Didi Global, Inc. is contemplating giving up control of its valuable data as part of efforts to resolve a Chinese regulatory probe, Bloomberg News reported on Friday.
According to the report, the ride-hailing giant has put forth a number of proposals to appease the powerful internet industry overseer, including ceding management of its data to a private third party.
Regulators have additionally proven a desire for the third get together to be state-controlled, Bloomberg mentioned, citing a supply. It's uncertain how such an arrangement would impact Didi's access to the data, which is crucial to helping the firm orchestrate 25 million rides a day between some 400 million riders and drivers, reported Al Jazeera.
They are weighing a range of potential punishments, including a fine, suspension of certain operations or the introduction of a state-owned investor, people familiar with the matter said.
One proposal on the table was to bring in a state-owned firm with a larger stake than current top shareholders SoftBank Group Corp. and Uber Technologies Inc., one of the sources said. Also possible is a forced privatization and delisting or withdrawal of Didi's U.S. shares, though it's unclear how such an option would play out.
Tougher Curbs on Tech Likely
Didi is one of China's biggest ride-hailing firms. It is often considered the easiest way to call a ride in crowded cities in China. Apart from China, it offers services in more than 15 global markets and gathers large amounts of real time mobility data every day.
On June 30, Didi debuted in New York Stock Exchange for the biggest IPO by a Chinese company in recent times. Didi Global Inc (DIDI.N) shares ended their first day of US trading slightly over their initial public offering (IPO) price, valuing the ride-hailing giant at $68.49 billion in the biggest US listing by a Chinese company since 2014, reported Reuters.
However, the cyber space administration of China which is chaired by Xi Jinping ordered all app stores in the country to remove Didi from its servers citing serious violations on company's usage of personal information and global revenue collections. Reasons of national security and public interests were also given. The company was accused of misusing the user data.
This was seen as a continuation of the clampdown on technology companies and their high-profile founders that started when Alipay's Hong Kong listing was cancelled at the last minute last November prompting Jack Ma's retirement, according to The Telegraph.
Beijing's moves against Didi sends a stark message to Chinese businesses about the government's authority over them, even if they operate globally and their stock trades overseas. It also highlights the increasing fear and insecurity among Chinese government that Chinese tech giants could provide the data to the United States