China’s cyberspace administration launches probe into ride-hailing giant Didi, two days after mega IPO

China’s internet regulator said it has stopped Didi Chuxing from registering new users, two days after the country’s dominant ride-hailing service completed the largest initial public offering (IPO) by a Chinese company this year in New York.

“In order to prevent risks regarding national data security, to maintain national security, and protect the public interest, Didi is now under a cybersecurity review based on the National Security Law, Cybersecurity Law and Measures for Cybersecurity Review,” the country’s cybersecurity review office said in a statement published on Friday, without elaborating.

Didi’s response was swift. “Didi will fully cooperate with the relevant government authority during the review,” it said on a statement on Friday. “We plan to conduct a comprehensive examination of cybersecurity risks, and continuously improve our cybersecurity systems and technology capacities.”

“This does not mean that the cyber security review office will issue a ticket after reviewing Didi,” said Ding Mengdan, a lawyer at Beijing Yingke (Hangzhou) law firm. “It’s a pre-review to prevent any security risks in advance and so that the government can conduct ongoing supervision.”

The ride-hailing giant raised US$4.4 billion in a US initial public offering on Wednesday in an upsized sale that valued the company at about US$70 billion. Reuters reported June 17 that China’s market regulator had begun an antitrust probe into Didi, citing three people with knowledge of the matter.

Despite worsening geopolitical tensions between the US and China, Didi pulled in an astronomical number from investors for a company that has yet to turn a profit. US investors have bought into the growth story of Didi, which was started as a ride-hailing app in 2012 by Alibaba Group Holding alum Cheng Wei, and has since branched out into developing and manufacturing electric vehicles and autonomous cars in China.