China’s State Internet Security Review Office announced on Friday (July 16) that seven departments, including the Ministry of Public Security and the Ministry of State Security, were stationed at China’s online taxi giant DDT on the same day to launch a cybersecurity review.
China’s State Internet Information Office (SIIO) said in an announcement on its WeChat public website on Friday that in accordance with the arrangement of cyber security work, the SIIO, together with the Ministry of Public Security, the Ministry of State Security, the Ministry of Natural Resources, the Ministry of Transport, the General Administration of Taxation, the General Administration of Market Regulation and other departments, jointly stationed at DDT Travel Technology Co. to conduct a cyber security review.
DDT went public on Wall Street on June 29, raising about $4.4 billion. A day after its Wall Street debut, Drip’s stock price soared nearly 16 percent, and it was seen as the largest Chinese company to list in the U.S. since 2014.
But two days after DDT listed on the New York Stock Exchange, China’s Office of Cybersecurity Review made a surprise announcement on July 2 to launch a cybersecurity review of DDT. The announcement claimed that the launch of the cybersecurity review of DDT is to prevent national data security risks, safeguard national security and protect the public interest. China’s network security review office also decided that during the security review period, DDT would stop registering new users in order to cooperate with the network security review and prevent the expansion of risks.
On the day of its Wall Street IPO, DDT’s shares opened in the red, with a total market value of more than $80 billion at one point. However, after China’s National Network Security Review Office announced a cybersecurity review of it, Drip’s stock price slid all the way down, with a market value of more than $21.9 billion evaporating in 10 days after the IPO.
Five days later, the Office issued another notice, accusing all 25 apps belonging to DDT’s parent company, Beijing Xiaogan Technology Co. It ordered app stores to take them all down.
Drip shares fell more than 7 percent in pre-market trading on Wall Street after China’s State Internet Information Office announced Friday that it was working with the Ministry of Public Security, the Ministry of State Security and seven other departments to station at Drip.
The cybersecurity review of DDT comes after Beijing officials had let it be known that the overseas listing of online platform businesses that hold large amounts of user data would raise security concerns. The Chinese government is also strengthening policies to prevent privacy breaches and protect data security.
The Wall Street Journal recently reported that Chinese authorities had suggested that DDT postpone its Wall Street listing in order to do some self-examination of cybersecurity issues, as they feared that huge amounts of personal information could fall into U.S. hands due to U.S. government audit requirements for public companies.
China’s State Internet Information Office on July 10 released for public comment a revised draft of “cybersecurity censorship measures,” which specifies that Chinese companies with more than 1 million users’ personal information must declare and undergo security reviews when they go public abroad.
As China’s largest online car company, DDT was founded in 2012. SoftBank, Alibaba, Tencent and Uber have all injected capital into the company.