China weighing unprecedented penalty for Didi after US IPO

china weighing unprecedented penalty for didi after us ipo

Sumary of China weighing unprecedented penalty for Didi after US IPO:

  • Officials from the CAC, the Ministry of Public Security, the Ministry of State Security, the Ministry of Natural Resources, along with tax, transport and antitrust regulators, began an investigation on-site at the company’s offices, the cyberspace watchdog said in a statement.
  • Beijing is likely to impose harsher sanctions on Didi than on Alibaba Group Holding, which swallowed a record US$2.8 billion (S$3.8 billion) fine after a months-long antitrust investigation and agreed to initiate measures to protect merchants and customers, the people said.
  • “It’s hard to guess what the penalty will be, but I’m sure it will be substantial,” said Minxin Pei, a professor of government at Claremont McKenna College in California.
  • It turned co-founder Cheng Wei into a billionaire and rewarded long-time backers SoftBank Group, Tiger Global Management and Temasek Holdings.
  • In one example of concern, Didi had disclosed statistics on taxi trips taken by government officials, one of the people said, although it’s not clear whether that specific issue was raised with the company.
  • “Beijing wants the internet sector to understand that cybersecurity and data security are now among the government’s top priorities, and individual companies’ profit can be sacrificed when cybersecurity and data security may be exposed to risks,” said Feng Chucheng, an analyst with consultancy Plenum in Beijing.
  • Xi Jinping’s government is trying to strike a delicate balance between reining in the power of China’s tech giants without inflicting serious damage on a critical sector that has bolstered economic growth.
  • The crackdown began last year when Beijing forced Jack Ma’s Ant Group to call off what would have been the world’s largest-ever IPO.

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