July 19 (Reuters) – Chinese authorities are poised to impose a fine of more than $1 billion on auto company Didi Global, people familiar with the matter said on Tuesday, which could end an investigation into the firm. cybersecurity practices.
The people said the fine would be more than 8 billion yuan ($1.28 billion), about 4.7% of Didi’s total revenue of $27.3 billion last year. They refused to reveal their identities as the information has not yet been released to the public.
The Wall Street Journal first reported the potential size of the fine earlier Tuesday.
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The ride-hailing company did not immediately respond to Reuters’ request for comment.
Didi’s fine would be the largest regulatory penalty imposed on a Chinese tech company since e-commerce titan Alibaba Group (9988.HK) and delivery giant Meituan (3690.HK) China’s antitrust regulator fined $2.75 billion and $527 million last year, respectively.
Alibaba’s fine was equivalent to about 4% of its 2019 domestic sales, and Meituan’s 3% of its 2020 domestic sales.
Didi’s punishment could allow it to ease Beijing’s ban on adding new users to its platform and restore its apps to local app stores.
Didi was founded in 2012 by former Alibaba employee Will Wei Cheng and is backed by SoftBank Group. (9984.T) and Uber Technologies (UBER.N)previously set aside 10 billion yuan for potential fines, Reuters reports.
The company has struggled to get its business back on track after angering Chinese regulators by pursuing a $4.4 billion New York listing in June 2021.
Days after Didi went public, China’s powerful internet watchdog, the Cyberspace Administration of China, launched a cybersecurity investigation into the company’s data practices and ordered app stores to remove 25 mobile apps operated by Didi.
The restrictions have eroded Didi’s dominance and allowed rival ride-hailing services run by automakers Geely ( GEELY.UL ) and SAIC Motor. (600104.SS) to gain market share.
The company announced it would be delisted from the New York Stock Exchange in December, and shareholders gave the nod to the plan in May. read more
Didi’s shares soared in its initial public offering (IPO), valuing the company at $80 billion. It was the largest US listing by a Chinese firm since 2014.
In addition to Didi, CAC also initiated cybersecurity investigations of the Full Truck Alliance (YMM.N) and online recruitment firm Kanzhun Ltd July 2021.
Kanzhun and Full Truck Alliance said on June 29 that the regulator allowed their apps to resume new user registrations. read more
($1 = 6.7405 Chinese Yuan Renminbi)
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Reporting by Julie Zhu and Xie Yu in Hong Kong; Yingzhi Yang in Beijing and Nivedita Balu in Bengaluru; Edited by Aditya Soni and Edmund Blair
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