US-listed Full Truck Alliance Co and Kanzhun Ltd are among the latest firms targeted by China’s cyberspace watchdog. State-run Global Times newspaper says tech companies cannot control more data than the state.
(AF) China’s cyberspace watchdog ramped up a crackdown on tech companies, tightening its grip on the industry as it moves to control data it deems a matter of national security.
The watchdog said on Monday it is investigating apps run by two more foreign-listed companies, Kanzhun Ltd and Full Truck Alliance Co. The announcement comes a day after it ordered a suspension of app downloads for Chinese ride-hailing giant Didi Global Inc, which went public in a $4.4 billion US listing last week.
The investigations are the latest in a series of clampdowns on home-grown technology giants over antitrust and data security concerns.
Tech giants must not be allowed to control a super database that has more detailed personal information than the state, the Global Times newspaper, a Communist Party mouthpiece, wrote in a commentary on Monday. Didi’s huge database is a threat to national security because its biggest two shareholders, SoftBank Group and Uber Technologies, are foreign companies, it said.
“For a government that is keen to showcase its homegrown champions, one would think that China would want to deal with these issues in a timely and private manner,” said Zennon Kapron, head of research and consultant group Kapronasia. “The fact that this isn’t happening is a clear indication that China is looking to use these companies as a warning to other tech firms.”
Tech shares were hammered by the news.
SoftBank Group Corp, whose Vision Fund owns stakes in Didi Global and Full Truck Alliance, fell 5.3% in Monday trading on the Tokyo Stock Exchange. The Hang Seng tech index, a gauge of Hong Kong-listed technology stocks that is dominated by large Chinese companies such as Tencent Holdings Ltd, fell 1.8%.
The latest action targets two truck-hailing apps operated by Full Truck Alliance and an online recruiting app owned by Kanzhun.
The app-based businesses should halt new user registrations during its review of their operations, the regulator said in a statement, adding that the investigations are to “prevent national data security risks and safeguard national security.”
The cyberspace agency did not offer further details about the investigation into the three apps, but cited China’s national security law and cybersecurity law.
On Saturday, a Didi executive moved to ease concerns over the use of its data.
“Like many other Chinese companies listed overseas, Didi has been storing domestic users’ data on servers within China,’’ Li Min, vice president of Didi, said over the Twitter-like Weibo social media platform. “We definitely do not provide the data to the US.”
He added later that Didi’s road data is also stored within China.
With additional reporting by Reuters