Beijing has widened the clampdown on its ‘platform economy’ with new measures demanding companies with large data stores must surrender to a pre-IPO investigation
China’s cyberspace regulator has declared any company with data of more than 1 million users must undergo a security review before listing its shares overseas, broadening a clampdown on its large “platform economy”.
The security review, announced on Saturday by the Cyberspace Administration of China (CAC), will put a focus on the risks of data being affected, controlled or manipulated by foreign governments after overseas listings.
China’s cyberspace regulators are imposing tighter restrictions on data collection and data storage. Authorities are also more broadly pushing for companies to list domestically.
Two new sets of rules, the Data Security Law and the Personal Information Protection Law, which cover data storage and data privacy respectively, are set to come into effect this year.
Saturday’s announcement will also require firms to submit the IPO materials they plan to file for review.
The security review, according to the CAC, will consider national security risks as “risk of supply chain interruption due to political, diplomatic, trade and other factors,” and risk of key data “maliciously used by foreign governments after listing in foreign countries”.
The CAC is seeking public opinion on the proposed rules.
The notice comes after Chinese authorities launched a probe of ride-hailing giant Didi Global Inc for allegedly violating user privacy, just days after its listing in New York.
Didi’s shares plunged 20% on news of the probe, and the company said its revenue would be affected.
- Reporting by Reuters