Who owns Didi?
When I spoke to Didi Chuxing's founder Cheng Wei in 2018, the one thing that was apparent was that this was a man on a mission. He wanted to take the Chinese firm global, and to offer a new vision of what a company driven by data could make possible. BBC NewsDidi says removal of app in China will affect business
07 July, 2021 - 03:03am
07 July, 2021 - 03:03am
Shares in ride-hailing giant Didi Chuxing plunged more than 20% on Tuesday, less than a week after the Chinese app listed on the New York Stock Exchange.
The company's share price fell to a low of $11.58 in morning trading, down 25% from $15.53 at the last market close.
The fall comes after China announced late Friday that new users in the country would not be able to download the app while it conducts a cybersecurity review of the company.
Traders, who couldn't buy or sell the stock on Monday as markets were closed, reacted to the news Tuesday. Shares in other Chinese names that are listed on U.S. stock markets also fell, with Baidu dropping around 4%, JD shedding roughly 3.5% and Alibaba slipping more than 2%.
Didi listed on the NYSE last Wednesday with a market cap of around $68 billion. Stock in the company rose nearly 16% on Thursday and fell just over 5% on Friday.
Tuesday's slide in Didi's share price comes after The Wall Street Journal on Monday, citing people familiar with the matter, reported that Didi was advised by Chinese regulators to postpone its U.S. listing and review its network security several weeks before it went public.
Didi did not immediately respond to a CNBC request for comment.
Kendra Schaefer, a partner at Beijing-based strategic advisory consultancy Trivium China, told CNBC's "Squawk Box Europe" on Tuesday that Didi "definitely should have considered pulling the IPO."
She added that companies like Didi have huge government relations departments that are regularly in contact with regulators.
Regulators may not have given Didi "a clear directive," she said, adding that "it is absolutely possible that Didi wasn't really sure which way to jump and facing investor pressure they decided to just go for it."
China is starting to crack down on its tech titans after years of relatively little regulation. After announcing its Didi probe, Chinese regulators also opened cybersecurity reviews into U.S.-listed Boss Zhipin and subsidiaries of Full Truck Alliance.
In June, Reuters reported that Chinese regulators were probing Didi for antitrust violations. Beijing is also reportedly looking into the company's pricing mechanism.
Didi warned in its IPO prospectus that it could be penalized by dissatisfied regulators.
"We cannot assure you that the regulatory authorities will be satisfied with our self-inspection results or that we will not be subject to any penalty with respect to any violations of anti-monopoly, anti-unfair competition, pricing, advertisement, privacy protection, food safety, product quality, tax and other related laws and regulations. We expect that these areas will receive greater and continued attention and scrutiny from regulators and the general public going forward," the company said in its prospectus.
Founded in 2012, Didi said it has 493 million annual active riders, and 41 million average daily transactions. It began expanding internationally in 2018, and the company now operates in 14 countries outside of China.
In addition to traditional ride-hailing, Didi is heavily invested in making autonomous taxis a reality, and operates several segments around mobility.
— Additional reporting by CNBC's Steve Kovach.
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Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.
07 July, 2021 - 03:03am
06 July, 2021 - 03:53pm
Today, the first full day of U.S. trading since the moves were publicized in the U.S., Didi stock fell as much as 25% on the New York Stock Exchange, dipping below its IPO price and cutting its market cap by as much as $22 billion. The surprise haircut could have serious long-term implications for Chinese equity markets because they highlight local political risk. But that political risk might not matter if not for a technical vulnerability shared by tech companies around the world: Their massive dependence on extremely centralized app stores means their lifeblood can be cut off without warning.
It remains unclear exactly what the alternatives are for mobile developers in the short term, but these events yet again drive home the case for what’s known as “Web 3.0.” Largely but not exclusively envisioned as leveraging blockchain technology, Web 3.0 would replace the platform-dependence of today’s web with more open, trustless and permissionless systems.
That would involve its own social and economic tradeoffs, but if it reduced the power of app platforms, it could provide significant resilience for companies now at the mercy of either authoritarian governments or tech giants.
The swiftness and extremity of the move against Didi echoes the past nine months of intense tech backlash from China’s ruling Communist Party. It arguably kicked off with last year’s kiboshing of the Ant Group IPO and the forceful sidelining of CEO Jack Ma. We saw a second major episode in June with bans on bitcoin mining and cryptocurrency transactions. Even Tesla, a U.S. company with previously friendly relations with Beijing, seems increasingly on the receiving end of China’s version of techlash.
The post-IPO timing of the Didi rug pull raises even more pointed questions. It worked out well for Didi, all things considered, because the company gets to keep all that American and international money despite a suddenly extremely different business outlook. Chinese authorities had already pushed Didi to delay its IPO, and given the regulatory environment, Didi must have known serious backlash was possible if it proceeded. Jack Ma’s downfall, after all, followed a similarly defiant lambasting of Chinese financial regulators last October.
Bloomberg’s Shuli Ren hints at the possibility that Didi was somewhat knowing in its IPO defiance, happy to harvest “chives” from ill-informed Western investors ahead of imminent CCP enforcement (though the company has denied foreknowledge of the specific enforcement action). All this led CNBC’s Jim Cramer to declare that after this weekend’s events, you’d have to be “a moron” to invest in Chinese tech startups.
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But what’s missing from Cramer’s read is that, though Chinese authoritarianism vastly increases the risk, the same thing could happen to many of the world’s biggest tech companies. Facebook, Seamless, Uber and even Twitter’s U.S. business could be crippled if not outright destroyed in a matter of days simply by removing their apps from Google Play and Apple’s App Store, each the overwhelmingly dominant portal for mobile phone apps for the Android and iPhone ecosystems.
(In fact, probably thanks to a desire to wrest control from Apple and Google, China has a much more diverse app store ecosystem than the U.S. For instance, Tencent’s MyApp market has about 25% of the app market. In the U.S., efforts by the likes of Samsung and Amazon to create viable alternatives to the Big Two app stores have basically failed.)
It might seem implausible that a giant company like Uber could be hit by such a severe governmental action in the U.S., and it’s true that unlike China, America offers a robust and transparent system for legal appeal of any such governmental effort. But the app stores have taken dramatic unilateral action under their terms of service, as when Google and Apple banned unmoderated social media platforms Parler and Gab.
Apple even directly leveraged its censorship power for competitive purposes when it pulled Epic Games’ hit “Fortnite” as retaliation for Epic’s attempt to encourage payments that circumvented the App Store and its exorbitant 30% cut of revenue.
These are regulatory and political problems, of course, and some might hope new Federal Trade Commission Chairwoman Lina Khan will apply pressure to encourage alternatives to the Apple/Google duopoly. Those could include mandated improvements to side-loading options on phones, or more drastic moves like breaking up the vertical integration of phone manufacturing and content.
The original internet promised that old gatekeepers would be swept out of the way. Yet here we are with entirely new chokepoints for information and innovation: the app stores. They have become immensely powerful and profitable gatekeepers thanks to vertical integration between hardware, operating systems and software during a period of generally lax antitrust enforcement.
The openness of the Web 3.0 design ethos is aimed at breaking those strangleholds, and there’s ever more evidence that big companies should support the movement – and their right to connect directly with their own customers.
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(Bloomberg) -- China expanded its latest crackdown on the technology industry beyond Didi Global Inc. to include two other companies that recently listed in New York, dealing a blow to global investors while tightening the government’s grip on sensitive online data.In a series of announcements that began on Friday and escalated over a holiday weekend in the U.S., Beijing ordered all three companies to halt new user registrations and told app stores to remove Didi’s service from their platforms.
Index publisher FTSE Russell said Didi Global Inc will be added to its global equity indexes as scheduled on July 8, but not if trading in shares of the Chinese ride-hailing company is suspended during U.S. market hours on Wednesday. FTSE Russell said earlier this month Didi will be included in the FTSE All-World Index, the FTSE Global Large Cap Index, and the FTSE Emerging Index in an expedited entry following the Chinese company's $4.4 billion listing on the New York Stock Exchange last week. But Didi and its investors have been thrown into turmoil since late last week as Chinese regulators launched a crackdown on the company.
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Chinese regulators have clamped down on the country’s largest ride-hailing app, Didi Global Inc., days after its shares began trading in New York. Authorities told Didi to stop new registrations and ordered its app removed from China’s app stores pending a cybersecurity review. Didi is the latest company to face intensified scrutiny in a crackdown on some of China’s biggest technology giants.
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