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China’s Cybersecurity Regulator Targets More U.S.-Listed Tech Companies After Didi Investigation

China’s cybersecurity officials have launched investigations into three more apps operated by U.S.-listed companies, just one day after they ordered the country’s smartphone app stores to remove Didi Chuxing over the misuse of customers’ personal information. Chinese regulators are clamping down on the country’s tech companies through tighter regulations on data security.

The Cyberspace Administration of China (CAC) said in a statement on Thursday that it had opened an investigation on Boss Zhipin, an online recruiting platform operated by Kanzhun. The Beijing-based firm, which claims to be the country’s largest online recruitment site, debuted on Nasdaq in mid-June after raising $912 million. The initial public offering turned its founder Zhao Peng into a billionaire.

Another recently minted billionaire in the CAC’s crosshairs is Zhang Hui, the founder and CEO of Full Truck Alliance. The CAC said it’s targeting the truck-hailing platforms Yunmanman and Huochebang, which merged to form Full Truck Alliance in 2017. The Guizhou-based company describes itself as one of the largest digital freight platforms in the world. Dubbed China’s “Uber for trucks,” the company raised $1.6 billion by listing its shares on the New York Stock Exchange on June 22.

China’s cyberspace regulator said the latest investigations are intended to “prevent risks regarding national data security, maintain national security and safeguard public interest,” citing the same reasons when it announced a probe on Didi Global last week. Officials had also ordered Yunmanman, Huochebang and Boss Zhipin to suspend new user registrations.

Full Truck Alliance has vowed to fully cooperate with the probe, according to the company’s statement on Twitter-like Weibo. Kanzhun did not immediately respond to the regulator’s statement.

A day earlier, the CAC ordered Chinese app stores to remove Didi Global’s ride-hailing app for serious violations of laws and regulations involving the collection and usage of personal information.

In response, Didi said it had suspended new sign-ups, but those who had already downloaded the app, including passengers and drivers, can continue to make use of its services. “We sincerely thank authorities for guiding Didi to examine the risks,” the company wrote on Weibo shortly after the regulator’s announcement.

The data-security crackdown comes less than a week after Didi debuted on the New York Stock Exchange and raised $4.4 billion. Didi had stated in its prospectus that the firm might be subject to the new Data Security Law, given that it “receives, transmits and stores a large volume of personally identifiable information” on its platform.

The new Data Security Law, which will take effect on September 1, prohibits enterprises from transferring “core state data” overseas without the approval of Chinese regulators. Violators will be subject to a fine of up to 10 million yuan ($1.6 million) and have their operating licenses revoked.

The latest cybersecurity investigations on Didi, Kanzhun and Full Truck Alliance appear to be in line with the upcoming data security legislation, said Brian Tang, former corporate lawyer and founding executive director of Hong Kong University’s LITE (Law, Innovation, Technology and Entrepreneurship) Lab program. He points to the fact that all of the targeted apps are big data platforms that have dual-class shareholdings and VIE (variable interest entity) structures. Chinese companies have long used VIEs to circumvent restrictions on foreign ownership.

The CAC recently named hundreds of apps that it said had illegally and excessively collected personal data. Among them are apps created by technology giants such as Tencent, ByteDance and Baidu. However, none of them have been ordered off the country’s app stores.

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