China government clamp down on ride-hailing company Didi Chuxing

China government clamp down on ride-hailing company Didi Chuxing

The Cyberspace Administration of China launched an investigation into the country’s largest ride-hailing company Didi Chuxing citing issues associated with national data security. The investigation was launched two days after Didi Chuxing debuted within the new york stock market . The news of the investigation knocked off 5% off Beijing-based Didi’s shares on Friday. Didi’s Initial Public Offering (IPO) was the bourse’s second-biggest of the year.

The Chinese government’s internet watchdog claims that the investigation is aimed toward preventing security-related risks. it's also prevented its application from accepting new users until the investigation is over. Didi Chuxing said that they're going to cooperate with the relevant government authority. It said that aside from taking in new users its operations are continuing normally.

Didi vice chairman Li Min said that Didi Global Inc stores all China user and road data at servers within the country and denied all possibilities that the corporate passed data to the us . Min also said that it might sue any social media user who claimed that Didi transferred data during its recent IPO process after several such claims were made on Weibo, China’s Twitter-like social media platform.

“Like many overseas-listed Chinese companies, Didi stores all domestic user data at servers in China, it's absolutely impossible to pass data to the us ,” Li said during a post on Weibo, consistent with press agency Reuters. Didi said that it'll conduct a comprehensive examination of cybersecurity risks.

Several experts however believe that the investigation on Didi may be a measure to regulate the country's fast-growing and freewheeling tech sector. The Wall Street Journal during a report said that China increased its crackdown on tech companies citing anti-competitive practices among Chinese internet giants. It also said that the Chinese government called out tech companies citing alleged offences, including inconsistent pricing, user privacy concerns and difficult working conditions.

Earlier in April, the Chinese government slapped a $2.8 billion dollar fine on Alibaba claiming it had abused its dominant market position by engaging in controversial practices.

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