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China’s $1 billion fine on Didi could end mobility giant’s troubled year – londonbusinessblog.com

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Didi, the Chinese behemoth who spent a year overhauling regulations, has been fined more than 8 billion yuan ($1.28 billion) by the country’s authorities. The Wall Street Journal and Reuters reported.

The company did not immediately respond to a request for comment. In addition to the fine, regulators will also allow Didi to reinstate his app in domestic app stores and proceed with his plan to list his shares on the Hong Kong Stock Exchange, according to the reports.

If the move materializes, it could be a year of turbulence for SoftBank-backed Didi, once celebrated in China as the rideshare darling.

The fine is not a small number, accounting for about 4.7% of Didi’s 174 billion yuan in sales last year, but it can be read as a win-win situation where the authorities show who is in power and Didi can gradually get back to business, albeit under much more scrutiny.

What happened to Didi?

Last July, the Chinese government launched a data security investigation in Didi, just days after the company raised $4 billion with its first sale of shares in New York. The regulators also pulled the app from Chinese app stores, saying it was “illegally collecting user data.”

Neither Didi nor the regulators went into detail about what was “illegal,” but media reports and a memo viewed by londonbusinessblog.com all indicated that the Beijing company had not assured Beijing that its data practices were secure before taking it to the New York State Bureau of Investigation. went public, meaning data could be shared with US regulators.

At the time, Didi was the largest mobility platform in China with more than 500 million active users per year, who are verified by their real name under law in the country, meaning the company had access to stacks of geolocation data that could be considered sensitive.

Didi began delisting from the New York Stock Exchange in December and the deal was sealed in May. It is now targeting Hong Kong, which has seen a slew of secondary listings in recent years from Chinese tech giants trading in the US — Alibaba, JD.com and Baidu, to name a few — as tensions between China and the US increase.

In recent months, the US has added dozens of Chinese tech companies, including microblogging giant Weibo, to a watchlist of companies that could be delisted if they fail to meet Securities and Exchange Commission audit requirements.

How exactly Didi fixed his data security framework is unclear, but his experience will provide a roadmap for other homegrown data-intensive tech companies pursuing public investors outside mainland China. Robotaxi company Pony.ai, one of China’s highest-rated startups, Reportedly put its SPAC plans on hold in the US as it faced similar cross-border data challenges.

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