China orders ride-hailing firms Didi, Meituan to stop 'disorderly expansion'

BEIJING (REUTERS) – Chinese regulators have summoned ride-hailing giant Didi Chuxing and ten other car platforms to demand they cease “disorderly expansion” and “vicious competition” tactics, the government said on Thursday (Sept 2), amid a growing national crackdown on the tech industry.

China has in recent months tightened its scrutiny of its largest tech firms in sectors ranging from e-commerce to entertainment, launching antitrust probes and rolling out strict regulation.

The companies, including the ride-hailing arm of major services app Meituan, were told by regulators on Wednesday that the industry suffered from poor behaviour including recruiting unqualified drivers and “shifting the risks of operations onto drivers”, according to the Transport Ministry statement.

The companies were ordered to investigate internal problems and “immediately rectify” poor behaviour, with regulators stressing that ride-hailing platforms must also reduce the cut they take from transactions and protect passengers’ personal data.

The announcement rattled tech investors on Thursday, with Meituan’s Hong Kong-listed stock losing some of its earlier gains and up only 0.63 per cent from the previous day at noon.

Regulators opened a cyber-security probe into Didi the day after it raised more than US$4.4 billion (S$5.9 billion) in a New York initial public offering (IPO), and are reportedly mulling a ban on overseas IPOs of tech firms handling large amounts of sensitive user data.

China’s app-based services have expanded into nearly every aspect of modern life in recent years, with companies in industries including shared bikes and food deliveries engaging in heated discount wars against rivals to gain market share.

The Transport Ministry on Thursday urged ride-hailing platforms to “maintain a fair competitive market environment” and promote the “healthy and sustainable development” of the industry.

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