Chinese Regulators, Police, State Security Start On-Site Probe Into Didi

Officials from seven different agencies in China descended on Didi Global’s Beijing headquarters as part of a cybersecurity probe into the ride-hailing giant’s business, The Wall Street Journal reported on Friday (July 16).

State police and security officials joined regulators from five agencies — the Ministry of Public Security, the Ministry of State Security, the Cyberspace Administration of China, the Ministry of Transport and Ministry of Natural Resources to — in the on-site investigation.

Dozens of regulators are now positioned at Didi’s headquarters, a source told the WSJ. Employees were warned to stay quiet and were told they cannot post anything on social media about what was going on, another source told the news outlet

The probe was initiated earlier in July by the Cyberspace Administration of China over allegations that Didi’s operations were a threat to national security. The investigation was announced days after Didi’s $4.4 billion initial public offering (IPO) on the New York Stock Exchange (NYSE).

Aside from national security concerns, China’s internet regulator alleged that Didi covertly gathered and stored personal information from its users. The agency then mandated that all of Didi’s apps be removed from app stores and from Tencent’s WeChat Pay and Ant Group’s Alipay. Didi could be facing fines and criminal charges along with having its business licenses pulled, the Journal reported.

Yan Luo, a partner and cybersecurity lawyer at Covington & Burling in Beijing, told the WSJ that Didi is the first Big Tech company in the country to be subjected to a cybersecurity review.

The Cyberspace Administration of China recently revised its security regulations and now mandates that any firm storing sensitive information on 1 million people or more must apply for a cybersecurity review before going public in another country.

The widening scope of cybersecurity reviews has moved beyond supply chain risks and now includes data security risks, including the international transfer of “important data and a large amount of personal data,” Luo told the WSJ.

Didi now has 377 million active users on its platform and has a trove of personal data that includes street mapping and real-time locations of cars and people, the WSJ reported.

A PYMNTS review of Didi’s F-1 filing with the Securities and Exchange Commission (SEC) showed that the company pointed to revenue opportunities for investors.