China’s cyberspace regulator said Saturday that any company with more than 1 million users’ data must undergo a security review before going public overseas, widening the crackdown on its vast “platform economy.
The security review will focus on the risk of data being influenced, controlled or manipulated by foreign governments after an overseas listing, China’s State Internet Information Office (CAC) said in posting the proposed rules on its website.
China’s cyberspace regulators are imposing stricter restrictions on data collection and data storage. Authorities are also pushing more broadly for companies to list domestically.
Two new sets of regulations covering data storage and data privacy, respectively, the Data Security Law and the Personal Information Protection Law, are set to take effect this year.
Saturday’s announcement will also require companies to submit IPO materials that they plan to submit for review.
The National Security Review Board said the security review considers national security risks as “the risk of supply chain disruption due to political, diplomatic, trade and other factors” and the “risk of malicious use of critical data by foreign governments after an offshore listing. “
The Net Office is seeking public comment on the proposed regulations.
The notice comes after Chinese authorities launched an investigation into alleged violations of user privacy by online car giant Drip, days after its New York IPO.
Drip’s shares plunged 20 percent on news of the investigation, and the company said its revenue would be affected.