China has fined ride-hailing app DiDi Global Inc – ADR DIDIY $1.2 billion for violating its data security law, cyber security law and personal information protection law. The decision has brought to conclusion a year-long investigation into the firm.
Regulators have also fined Didi’s Chairman Cheng Wei and President Jean Liu RMB 1 million each, according to a statement by the Cyberspace Administration of China (CAC), Bloomberg reports.
The Investigation: Didi’s trouble began when it went ahead with its U.S. IPO despite CAC urging the firm to put the initial offering on hold while its data practices were reviewed, Reuters reported citing sources.
Why It matters: Despite the fine, market experts have been upbeat about the prospects of the firm as the conclusion of the investigation is seen as a potential opportunity to end the ban on adding more users to its app.
The fine would amount to over 4% of Didi’s $27.3 billion total revenue last year and this would open up the possibility for its new listing in Hong Kong, reported The Wall Street Journal on Tuesday.
Stock Price: Didi Global OTC shares closed 5% higher as on Wednesday. The shares have been on an uptrend for the last five days, gaining over 17%.
Under Chinese Scrutiny: China also recently fined big tech firms Alibaba Group Holding Ltd. BABA and Tencent Holdings Ltd. TCEHY among others for not complying with anti-monopoly rules on the disclosure of transactions. Alibaba was involved in five transactions while Tencent was involved in 12 transactions. The maximum potential fine in each case stands at 500,000 yuan ($74,688) under the anti-monopoly law.
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