Didi Global Inc. has secured the green light to continue registering new users, indicating the worst is over for the ride-hailing giant that symbolizes Beijing’s bruising campaign to control the powerful internet industry.
The anticipated decision is one of the clearest signs yet that Xi Jinping’s government, eager to jump-start an economy that has been reeling under a three-year Covid Zero ban, needs the support of the private sector in its broader campaign.
Beijing is again allowing Didi to bring in new users for the first time since regulators removed the main app from its store in 2021, the company said in a statement on its official Weibo page. Those who share the service will return to the Apple and Android stores.
Didi, the former national champion who ousted Uber Technologies Inc. out of China, including one of the top companies in the middle of the internet industry vehicle that Beijing is doing in 2020, when it suddenly stopped Ant Group Co.’ s IPO. Regulators cracked down on Didi’s business in 2021 after the company went ahead with an initial public offering of US$4 billion more than Beijing wanted.
The reopening of the application is a prerequisite for Didi to resume business as usual, and eventually pursue a Hong Kong stock listing. It also suggests the government is serious about easing up on the giant of Alibaba Group Holding Ltd. for Tencent Holdings Ltd., including by approving the most significant crop of blockbuster titles since clamping down on game addiction.
“The relaunch of Didi’s app supports earlier indications from Beijing that the need for reforms in the local tech sector is nearing completion,” said Bloomberg Intelligence analyst Catherine Lim. “Disruption to the operations of tech giants such as Alibaba, Tencent should be minimal by 2023.”
It is unclear when the Didi app will be available for download again. One possibility is that it could appear before the usually busy Lunar New Year celebrations, when rides usually peak.
The return of Didi’s app 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 that this month, the regulatory revision was completed. That, coupled with the post-Covid Zero reopening and thawing tensions with the US, has led to an increase in price targets in the sector.
Didi’s long-awaited virtual re-emergence will also remove some of the uncertainty that has wiped out most of its value and forced trading in the sheltered pink sheet market for higher-risk securities. Beijing fined the company more than 8 billion yuan ($1.2 billion) at the conclusion of a year-long investigation into what it called a serious breach of national security.
The crackdown by regulators on Didi — including forcing it to cancel just months after its much-hyped New York IPO — has rattled investors and underscored Beijing’s willingness to punish its most famous company. Didi itself has won backing from tech giants including Tencent and Uber, and capital from a host of financial powerhouses from SoftBank Group Corp. to Blackrock Inc.
It is unclear under what conditions Didi will be allowed to continue working on the new list. Didi’s case was submitted to China’s Cyberspace Administration earlier and talks between the company and the regulator have been smooth, according to people familiar with the matter, who asked not to be identified discussing the sensitive matter.
More than two dozen Didi apps, including those for riders and drivers, were suspended from download around July 2021, when the government accused the Beijing-based company of violating personal information protection rules. Registration of new users in China has been suspended.
“In the future, the company will take effective measures to ensure the security of platform infrastructure and big data, and maintain national cyber security,” Didi said in the statement.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter that examines what leaders need to succeed. Log in here.