US-listed Full Truck Alliance and Kanzhun resume user registrations in sign of China’s cybersecurity probes nearing end

The two internet platforms can accept new users for the first time in nearly a year in a sign that their cybersecurity probes are close to an end
The investigations were launched shortly after a similar probe into Didi Global, but no announcement was made regarding the ride-hailing giant

Cybersecurity

Xinmei Shen

Published: 6:00pm, 30 Jun, 2022

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China’s internet watchdog has relaxed restrictions on two US-listed technology companies nearly a year after launching cybersecurity investigations into the firms along with ride-hailing giant Didi Global.

Truck service provider Full Truck Alliance and online recruiting platform Kanzhun can now resume new user registrations for their platforms after receiving approval from the office within the Cyberspace Administration of China (CAC) that was overseeing the probe, the two firms announced on Wednesday in posts to the microblogging platform Weibo.

Both companies have rectified problems found during the probe, they said in similar statements posted to their social media accounts, and they will continue to ensure the security of their platform infrastructure and big data and help protect national security.

No announcement was made regarding the Didi probe, the results of which remain up in the air despite recent signs that Beijing is easing regulatory pressure on the technology sector.

After delisting, Didi in rush for app comeback, sources say

In July last year, the CAC announced cybersecurity reviews of Full Truck Alliance and Kanzhun after their initial public offerings in New York the previous month. The probes were announced days after a similar one was launched for Didi, which also launched a US IPO that June despite government warnings against it. The move was later described as a deliberate act of deceit.

The resumption of user registrations for the two companies signals that the CAC’s probes are nearing an end. However, many consider Didi’s situation to be more complex.

Similar to Full Truck Alliance and Kanzhun, Didi was forced to stop allowing new users to sign up last year. But penalties for the ride-hailing service provider went further, with more than 25 of its apps being pulled from app stores.

Earlier this month, sources also told the South China Morning Post that Didi’s apps will soon be restored as the company rushes to make final app updates. That came after The Wall Street Journal reported that Didi will soon be cleared by regulators to resume normal business operations.

While under pressure from Beijing, Didi announced in December that it planned to delist in New York and seek a listing in another market such as Hong Kong. Shareholders approved the delisting in May, but the company said that it cannot file an application to list on another bourse until Beijing approves the completion of its rectification measures.

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Why China is tightening control over cybersecurity

Unable to expand its user base, Didi has been slowly losing ground in China since last summer. Didi’s order volume plummeted by 29 per cent between the time of its IPO through March, while rival Cao Cao Mobility saw orders grow 34 per cent in the same period, according to a calculation of monthly growth rate figures published by China’s Ministry of Transport in April.

Both Kanzhun’s and Full Truck Alliance’s US shares have also nearly halved in value from their peak before the CAC probes.

Beijing has recently relaxed its campaign to increase scrutiny of Big Tech companies, which kicked off at the end of 2020, in an effort to restore confidence in the sector and boost economic growth.

Didi to start trading on OTC market after delisting from NYSE

Last month, top Chinese Communist Party officials, including Vice-Premier Liu He and the party’s No 4 ranking member Wang Yang, met Big Tech leaders to encourage them to play a constructive role in the national economy.

The CAC, however, has expanded its toolkit with new regulations put in place to support its cybersecurity probes.

Last week, it launched a cybersecurity review into the country’s largest online academic research database, China National Knowledge Infrastructure, saying that the platform holds “sensitive information” related to the country’s major projects, significant technological achievements and development of core technologies.