Didi has won the nod for a mobile app reboot because it makes it easy to push back

Didi has won the nod for a mobile app reboot because it makes it easy to push back

(Bloomberg) — Didi Global Inc. has been given the green light to resume signing up new users, suggesting the worst is over for a shipping giant that has come to symbolize Beijing’s bruising campaign to rein in its powerful Internet industry.

The widely-anticipated decision is one of the clearest signs yet that Xi Jinping’s administration, which is seeking to kick-start the economy after three years of Covid Zero restrictions, sees the need for private sector support in this broader campaign.

Beijing will once again allow Didi to attract new users since regulators removed its main apps from stores in 2021, the company said in a statement on its official Weibo page. This suggests that the services will soon return to the Apple and Android stores.

Didi, once touted as a national champion to oust Uber Technologies Inc. from China, was among the most prominent companies at the center of a crackdown on the Internet industry that Beijing initiated in 2020 when it abruptly shut down Ant Group Co. and IPO. Regulators slammed Didi’s deal in 2021 after the company went ahead with a $4 billion-plus U.S. initial public offering against Beijing’s wishes.

Relaunching the apps is a prerequisite for Didi to resume business as usual and eventually work towards its Hong Kong stock market listing. It also suggests the government is serious about easing giants from Alibaba Group Holding Ltd. to Tencent Holdings Ltd., including by approving the biggest blockbusters since tackling gaming addiction.

“The relaunch of the Didi apps backs up earlier signals from Beijing that reforms within the local tech sector are coming to an end,” Bloomberg Intelligence analyst Catherine Lim said. “There should be minimal disruption to the operations of tech giants like Alibaba and Tencent in 2023.”

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It’s unclear when Didi’s apps will be available for download again. One option is to pop up right before the typically busy Lunar New Year celebrations, when tours tend to peak.

The return of Didi’s apps would be a milestone in Beijing’s preparations to loosen the grip on the country’s giant internet sector. Guo Shuqing, party secretary of the People’s Bank of China, said the regulatory overhaul is nearing completion this month. This, coupled with the post-Covid Zero reopening and the thawing of tensions with the US, has led to higher price targets across the sector.

Didi’s long-awaited virtual re-emergence would also erase the uncertainty that has wiped out much of its value and forced it to trade in rosy markets reserved for higher-risk securities. Beijing fined the company more than 8 billion yuan ($1.2 billion) at the end of a year-long investigation into serious breaches of national security.

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The ferocity with which regulators have cracked down on Didi — including forcing it to delist months after its much-hyped New York IPO — spooked investors and highlighted the extent to which Beijing is willing to punish more the most famous companies as well. Didi itself has won the backing of tech giants including Tencent and Uber, as well as capital from financial powerhouses ranging from SoftBank Group Corp. to Blackrock Inc.

It remains unclear under what conditions regulators will allow Didi to continue working on a new listing. Didi’s case was previously filed with the Cyberspace Administration of China, and negotiations between the company and regulators have gone smoothly, according to people familiar with the matter, who asked not to be identified to discuss a sensitive matter.

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Downloads of more than two dozen Didi apps, including apps for riders and drivers, were suspended around July 2021 when the government accused the Beijing-based company of violating privacy rules. Registration of new users in China has since been suspended.

“In the future, the company will take effective measures to guarantee the security of platform infrastructure and big data, as well as to maintain national cyber security,” Didi said in a statement.

Read more: Didi’s $60 billion collapse that changed Chinese tech forever

— With help from Fion Li and Sarah Zheng.

(Update with fifth paragraph analyst comments)

©2023 Bloomberg LP

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