China to fine Didi over $1 billion for data breach, sources say

The Didi logo is seen on the facade of the company’s headquarters in Beijing, China November 9, 2021. Picture taken November 9, 2021. REUTERS/Yilei Sun

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July 19 (Reuters) – Chinese authorities are set to fine ride-hailing company Didi Global more than $1 billion, sources familiar with the matter said on Tuesday, a move that could end an investigation on corporate cybersecurity. practices.

People said the fine would amount to more than 8 billion yuan ($1.28 billion), or about 4.7 percent of Didi’s total revenue of $27.3 billion last year. They declined to be identified as the information has not yet been made public.

The Wall Street Journal first announced the potential fine amount earlier on Tuesday.

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The ride-sharing company did not immediately respond to a Reuters request for comment.

Didi’s fine would be the heaviest regulatory penalty imposed on a Chinese tech company since e-commerce titan Alibaba Group (9988.HK) and delivery giant Meituan (3690.HK) were fined respectively of $2.75 billion and $527 million last year by China’s antitrust regulator.

Alibaba’s fine was equivalent to about 4% of its domestic sales in 2019, while Meituan’s was equivalent to 3% of its domestic sales in 2020.

Didi’s sanction could pave the way for Beijing to ease a restriction barring it from adding new users to its platform and allowing its apps to be restored to domestic app stores.

Didi, co-founded in 2012 by former Alibaba employee Will Wei Cheng and backed by SoftBank Group (9984.T) and Uber Technologies (UBER.N), had previously set aside 10 billion yuan for a possible fine, had previously reported Reuters.

The company has struggled to get its business back to normal after angering Chinese regulators by continuing its $4.4 billion New York listing in June 2021, despite being asked to suspend the float .

Days after Didi went public, China’s powerful internet watchdog, the Cyberspace Administration of China, launched a cybersecurity investigation into the company’s data practices and ordered app stores to delete 25 mobile applications operated by Didi.

The restrictions have eroded Didi’s dominance and allowed rival ride-sharing services operated by carmakers Geely (GEELY.UL) and SAIC Motor (600104.SS) to gain market share.

The company announced it would delist from the New York Stock Exchange in December and won shareholder approval for the plan in May. Read more

Didi’s shares soared during their initial public offering (IPO), giving the company a valuation of $80 billion. It was the largest U.S. listing by a Chinese company since 2014.

Besides Didi, the CAC also launched cybersecurity reviews of Full Truck Alliance (YMM.N) and online recruitment company Kanzhun Ltd in July 2021.

Kanzhun and Full Truck Alliance said on June 29 that the regulator had given their apps the green light to resume new user registrations. Read more

($1 = 6.7405 Chinese yuan renminbi)

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Reporting by Julie Zhu and Xie Yu in Hong Kong; Yingzhi Yang in Beijing and Nivedita Balu in Bangalore; Editing by Aditya Soni and Edmund Blair

Our standards: The Thomson Reuters Trust Principles.

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