DiDi Global (NYSE:DIDI) isn't the only U.S.-listed Chinese company to removed from app stores by Beijing. Truck-hailing service Full Truck Alliance Co. (NYSE:YMM) an online recruiting app Kanzhun (NASDAQ:BZ) - backed by tech giant Tencent (OTCPK:TCEHY) - have also been targeted by the latest action. Both companies went public in the U.S. in June, but have been ordered to stop adding users while the Chinese probes are conducted.
Investor reaction? Shares in SoftBank (OTCPK:SFTBF), whose Vision Fund owns stakes in Didi Global and Full Truck Alliance, slumped 5.4% in Tokyo on Monday. Meanwhile, the Hang Seng TECH Index, a gauge of Hong Kong-listed technology stocks like Tencent, ended the session down 2.3%. U.S. markets are closed Monday, but stay on the lookout for premarket movement tomorrow.
Bigger picture: Fearful of their growing influence, China is in the middle of a sweeping crackdown on the nation's biggest tech firms. Last November, Beijing pulled the planned IPO of fintech giant Ant Group, and in April, it hit Alibaba with a record $2.8B fine over abusing its market dominance. In May, China's antitrust regulator also ordered Didi and nine other on-demand transport companies to overhaul their practices ranging from price hikes to driver treatment.
Current investigation: China's cyber unit is commencing a review of Didi and others to "prevent data security risks, safeguard national security and protect the public interest." The Communist Party-backed Global Times also wrote that Didi appears to have the ability to conduct "big data analysis" of individual behaviors and habits, a feature that could require strict oversight by a government that is highly concerned with social control. Didi is the most dominant ride-hailing business in China, accounting for 88% of total trips in the fourth quarter of 2020.
Yesterday, DiDi said the app takedown in China "may have an adverse impact on its revenue in China," but is striving to "rectify any problems, improve its risk prevention awareness and protect users' privacy and data security."