Didi wins permission to relaunch apps as China Tech Crackdown Ebbs
(Bloomberg) — Didi Global Inc. has secured the green light to resume signing up new users, suggesting the worst is over for a ride-hailing giant that symbolized Beijing’s bruising campaign to rein in its powerful internet industry.
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The widely anticipated decision is one of the clearest signs yet that Xi Jinping’s administration, keen to jumpstart an economy that’s sagged under three years of Covid Zero restrictions, sees a need for private sector’s support in that broader campaign.
Beijing will allow Didi to get new users again, this is the first time Didi has been allowed to do so since its main apps were removed from the stores in 2021 by regulators. This was stated in a statement made on Weibo. This suggests that the services will soon be available in Apple and Android stores.
Didi, once feted as the national champion that drove Uber Technologies Inc. out of China, was among the highest-profile companies at the heart of a clampdown on the internet industry that Beijing initiated in 2020, when it abruptly halted Ant Group Co.’s IPO. Regulators cracked down on Didi’s business in 2021 after the company pushed ahead with a $4 billion-plus US initial public offering against Beijing’s wishes.
Didi must relaunch the apps in order to continue business as usual and eventually to work towards listing its stock in Hong Kong. This also indicates that the government is serious in easing down on giants like Tencent Holdings Ltd. and Alibaba Group Holdings Ltd., as well as by approving blockbuster titles.
“The relaunch of Didi apps supports earlier indications from Beijing that required reforms within local technology sector are near-completion,” Bloomberg Intelligence analyst Catherine Lim said. “Disruptions to the operations of tech giants such as Alibaba, Tencent should be minimal in 2023.”
It’s unclear when Didi’s apps would actually reappear for download. They could be available just before the Lunar New Year festivities, which are usually busier than usual.
The return of Didi’s apps would be a milestone in Beijing’s preparations to loosen its grip on the country’s giant internet sector. Guo Shuqing, party secretary of the People’s Bank of China, said this month the regulatory overhaul was drawing to a close. The combination of post-Covid Zero reopening tensions and thawing tensions has caused a frenzy of price target increases across the sector.
Didi’s long-awaited virtual reemergence would also eliminate some of the uncertainty that caused its loss of value. It was forced to trade on pink-sheet markets for higher-risk securities. Beijing fined Didi more than 8 billion Yuan ($1.2 Billion) after a year-long investigation into serious national security violations.
Read more: Didi’s Move From NYSE to Hong Kong — What to Know: QuickTake
The ferocity with which regulators cracked down on Didi — including forcing it to delist just months after the highly touted New York IPO — spooked investors and underscored the extent to which Beijing was willing to punish even its most celebrated firms. Didi herself had the backing tech giants Tencent, Uber, and capital from a host o finance powerhouses like SoftBank Group Corp. to Blackrock Inc.
It is unclear under which conditions Didi would be allowed to resume work on a listing. Didi’s case was filed to the Cyberspace Administration of China earlier and talks between the company and regulators have gone smoothly, according to people familiar with the matter, asking not to be identified discussing a sensitive matter.
Around July 2021, Didi apps for drivers and riders were all suspended from downloading after the government charged the Beijing-based company with violating privacy rules. Since then, new user registrations in China have been suspended.
“In the future, the company will take effective measures to guarantee the security of our platform infrastructure and big data, and maintain national cybersecurity,” Didi said in its statement.
Read more: Inside Didi’s $60 Billion Crash That Changed China Tech Forever
–With the assistance of Sarah Zheng and Fion Li
(Updates with analyst’s comments from the fifth paragraph)
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