Chinese ride-hailing giant Didi Chuxing denied a Reuters report that its co-founder and president Jean Liu was on her way out and threatened legal action to fight the “malicious” spreading of rumours.
Reuters reported on Monday that Liu told close associates that she plans to step down and encouraged others to look for new opportunities. She expects the government to take control of the ride-hailing giant and appoint new management, according to the news agency, citing sources familiar with the matter.
Didi’s shares plunged 6.6 per cent on the New York Stock Exchange on Monday.
In a post on microblogging platform Weibo, the company said the report was not accurate. “Didi is now actively and thoroughly cooperating with a cybersecurity inspection. Reuters’ rumour involving the management change at Didi is inaccurate information,” the Beijing-based tech giant said.
Didi has been at the centre of a regulatory storm in China since the Cyberspace Administration of China initiated a cybersecurity probe into the company in early July, just days after its blockbuster US$4.4 billion initial public offering in the US. A group of seven regulators, including the state security ministry and public security ministry, started an on-site investigation in mid-July.
While the investigation remains ongoing, 25 apps associated with Didi were removed from Chinese app stores and the ride-hailing firm was ordered to stop registering new users.
Neither Beijing nor Didi have offered information on the progress of the investigation, fanning speculation about the company’s fate after it “forced its way” to an IPO overseas against the advice of the cybersecurity regulator. The Wall Street Journal reported on Monday that Vice-Premier Liu He was forced to offer “self-criticism”, a practice once common under Mao Zedong, for failing to stop Didi from going public.
Since the start of the investigation, Didi has denied a slew of reports regarding its future. The company said it is not seeking to go private, as reported by Bloomberg in June. It also denied that it would hand data over to a third party, seek large new shareholders, or that the local Beijing government would take a stake in the company, as Reuters has reported.
The Didi app seen on a mobile phone in front of the company logo on July 1. The ride-hailing firm’s apps were removed from app stores in China following the launch of a cybersecurity investigation into the company. Photo: Reuters
In August, the South China Morning Post reported that the outcome of the investigation could lead to “changes in management”, which Didi denied as well.
The latest denial on Monday was the first time that Didi called out a news outlet by name and threatened legal action.
Liu joined Didi in 2014 as a co-founder and holds a 1.6 per cent stake in the company, which is currently worth around US$640 million. The dual-class share structure gives Liu 23 per cent voting rights. Liu, daughter of tech tycoon and Lenovo founder Liu Chuanzhi, worked as a banker at Goldman Sachs before joining the ride-hailing firm.
Didi’s daily active users have reportedly plunged by 30 per cent since its IPO, according to the Financial Times, citing data from a Shenzhen-based provider. Before its current troubles, Didi had 493 million annual active users globally and 13 million active drivers in China, with about 90 per cent of the country’s ride-hailing market.
Earlier this month, the Post reported that Didi has set up a committee headed by its founder to oversee the overhaul of its data management, as the ride-hailing giant accedes to regulators’ demands in a move described internally as “a matter of survival”.
The company’s founder and CEO Cheng Wei will head the Information and Data Security committee established in July, according to an internal memo seen by the Post. Chief technology officer Zhang Bo will be the executive deputy director, giving the new committee a broader scope than the previous group in charge of information security that was established in 2016.
The committee will comprise a number of units that oversee data security, cyberspace and information security, personal information protection, algorithm security, content security and overseas business privacy. A special secretariat was also created to handle emergency matters relating to data security, according to the memo.
Every business division at Didi had to “fully cooperate with the state investigation”, Cheng said during an August 13 meeting, according to an attendee who declined to be named for discussing a confidential matter. Cheng said the company must study and implement the government’s policies and regulations, cooperate with the investigation and conduct rectifications, according to the attendee, and every Didi division has signed “a letter of commitment” to data security.Internet Explorer Channel Network