3 app firms face scrutiny over data security

China's cyberspace watchdog said on Monday it is investigating online recruiter Zhipin.com, and truck-hailing apps Huochebang and Yunmanman, tightening regulations of tech companies over data security.

The announcement comes a day after the Cyberspace Administration of China ordered a suspension of app downloads for Chinese ride-hailing giant Didi Global Inc, which went public in a US listing last month raising US$4.4 billion.

Full Truck Alliance, the result of a merger between Huochebang and Yunmanman, and Kanzhun Ltd, the owner of Zhipin.com, went public in the US stock market last month, raising US$1.6 billion and US$912 million, respectively.

The three app-based businesses should halt new user registrations during the review, the CAC said in a statement, adding that the investigations are "to prevent security risks to national data, safeguard national security and protect public interest."

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.

Chinese regulators have also recently tightened scrutiny of Internet platform companies, including Alibaba Group and Meituan, for anti-competitive practices.

Full Truck Alliance, often dubbed "Uber for trucks" has over 10 million registered truck drivers and more than 5 million truck owners on its platform.

Zhipin.com, which connects job seekers and employers, is China's biggest online recruiter with 24.9 million monthly active users in the first quarter of 2021, Kanzhun said in its prospectus.

Full Truck Alliance said it would suspend new user registrations as required by the investigation and will cooperate with the probe. Kanzhun did not immediately respond to a request for comment.

Didi, which has a current market value of some US$75 billion, is also the subject of an antitrust probe by China's market regulator, the State Administration for Market Regulation, sources told Reuters last month.

The CAC said it had ordered app stores to stop offering Didi's app after finding the firm's user data collection and use in "serious violation" of regulations.

"The company expects that the app takedown may have an adverse impact on its revenue in China," Didi said in a statement but did not elaborate on the potential extent of the impact.

Dubbed China's Uber, Didi was founded nine years ago by former Alibaba executive Cheng Wei. It has gone on to dominate the country's ride-hailing market after winning a costly turf war against the US titan in 2016 and taking over Uber's local unit. It now claims more than 15 million drivers and nearly 500 million users, with services available in 16 countries.

Didi reported first-quarter revenue of about 42.2 billion yuan (US$6.5 billion), more than 90 percent of which comes from its China mobility division.

Didi, which collects a vast amount of mobility data for technology research and traffic analysis, also said it will strive to rectify any problems and will protect users' privacy and data security.

"No Internet giant can be allowed to become a super database of Chinese people's personal information that contains more details than the country, and these companies cannot be allowed to use the data however they want," the Global Times said on Monday in an opinion piece.