Chinese authorities are preparing to impose a fine of more than $1 billion on ride-hailing firm Didi Global , people familiar with the matter said on Tuesday, a move that could bring an end to a probe into the firm’s cybersecurity practices.
The people said the fine would be more than 8 billion yuan ($1.28 billion), accounting for about 4.7% of Didi’s $27.3 billion total revenue last year. They declined to be identified as the information was not yet made public.
The Wall Street Journal first reported the potential size of the fine earlier on Tuesday.
Didi’s fine would be the largest regulatory penalty imposed on a Chinese tech company since e-commerce titan Alibaba Group (9988.HK) and delivery giant Meituan (3690.HK) were fined $2.75 billion and $527 million respectively last year by China’s antitrust regulator.
Alibaba’s fine equated to about 4% of its 2019 domestic sales, while Meituan’s was equivalent to 3% of its 2020 domestic sales.
Didi’s penalty could pave the way for Beijing to ease a restriction banning it from adding new users to its platform and allow its apps to be restored on domestic app stores.
Didi, co-founded in 2012 by former Alibaba employee Will Wei Cheng and backed by SoftBank Group (9984.T) and Uber Technologies (UBER.N), previously set aside 10 billion yuan for a potential fine.
The company has struggled to bring its business back to normal after angering Chinese regulators by pushing ahead with its $4.4 billion New York listing in June 2021 despite being asked to put the float on hold.
Days after Didi went public, China’s powerful internet watchdog, the Cyberspace Administration of China, launched a cybersecurity probe into the company’s data practices and ordered app stores to remove 25 mobile apps operated by Didi.
The restrictions have chipping away at Didi’s dominance and allowed rival ride-hailing services operated by automakers Geely (GEELY.UL) and SAIC Motor (600104.SS) to gain market share.
The company announced it would delist from the New York Stock Exchange in December, and won its shareholders’ nod for the plan in May.
Shares of Didi soared in their initial public offering (IPO), giving the company a valuation of $80 billion. It was the biggest U.S. listing by a Chinese firm since 2014.
Besides Didi, the CAC also launched cybersecurity reviews of Full Truck Alliance (YMM.N) and online recruitment firm Kanzhun Ltd July 2021.
Kanzhun and Full Truck Alliance said on June 29 the regulator had given their apps the go-ahead to resume new user registrations.