China to Conclude Didi Cybersecurity Probe, Lift Ban on New Users

With concerns growing over a rapid deterioration in China’s economic outlook, Beijing has moved to pause its campaign to tighten its grip on homegrown tech giants and their troves of data.

The three companies went public in the U.S. last June and raised nearly $7 billion in total. Shortly afterward, China’s internet regulators began cybersecurity reviews. Didi was hit particularly hard—its market value plummeted in the following months, and less than a year after listing its shares in the U.S., the Beijing-based company decided to delist from the New York Stock Exchange.

The three have a combined market capitalization of about $25 billion, compared with around $115 billion last July 1—just before the investigations were announced—according to FactSet.

Chinese government authorities including the Cyberspace Administration of China conveyed the plan in meetings last week with executives from Didi, Full Truck Alliance—also known as Manbang Group—and Kanzhun, the people said.

Authorities are expected to deliver a conclusion of the probes into these companies around the same time, the people said. The three companies are expected to face financial penalties, they said—a relatively large fine for Didi, relatively lenient for the other two, some of the people said.

The companies are also expected to offer 1% equity stakes to the state and give the government a direct role in corporate decisions, some of the people said.

The Cyberspace Administration didn’t immediately respond to written questions. The companies didn’t immediately reply to requests for comment.

Last July, China’s internet watchdog ordered the companies to stop adding users and app-store operators in China to remove their mobile apps, saying they were collecting personal data illegally. The companies said at the time that they would fully cooperate with the review.

Cybersecurity agents launched monthslong on-site inspections, people familiar with the issue have said. Agents have questioned senior executives, downloaded internal records and collected emails and internal communications, they have said.

Some people familiar with the investigations said the authorities didn’t find substantial problems with the companies.

Around October, the Cybersecurity Administration suggested the three companies explore separate listings in Hong Kong. In May, Didi said its shareholders approved its plan to delist from the New York Stock Exchange. Didi had told shareholders it needed to delist before it could resolve a cybersecurity probe in China, and that it would pursue a listing in Hong Kong.

Full Truck Alliance is also pushing ahead with a Hong Kong share-offering plan, with the goal of listing by year-end, according to a person familiar with the matter. The company is likely to raise less than it did in the U.S., the person added.

At an April Politburo meeting, Chinese leader

Xi Jinping

said that any oversight of the technology sector would be more standardized to support the “healthy development” of tech firms. At a May meeting with attendees including tech executives, China’s top political advisory body, the Chinese People’s Political Consultative Conference, expressed support for a stronger digital economy, signaling a regulatory reprieve for tech giants.

Correction
U.S.-listed Chinese companies Didi Global, Full Truck Alliance and Kanzhun had a combined market capitalization of about $115 billion last July 1, before China’s cybersecurity regulator said it was investigating Didi. An earlier version of this article incorrectly cited a figure from July 2, after the investigation was announced. (Corrected on June 6)

Write to Keith Zhai at keith.zhai@wsj.com and Liza Lin at Liza.Lin@wsj.com