Didi Tumbles As Regulator Plans To Rid Ride-Hailing Industry Of ‘Excessive’ Commissions
Ride-hailing giant Didi Global saw its shares crash to their lowest level since the company’s market debut in June as Chinese authorities laid out plans to redouble their efforts to regulate the industry.
The Ministry of Transport (MOT) announced on Wednesday that it will impose an upper limit on commissions that car-pooling platforms can take from their drivers and regulate their pricing policies. The agency said it will ask the platforms to ensure their drivers receive reasonable payments and have sufficient rest.
“A few ride-hailing platforms have imposed strategies like arbitrarily adjusting their pricing rules and setting up excessive commission rates after gaining a dominant market position,” said Li Huaqiang, deputy director of the MOT, at a State Council briefing. “These measures have induced overtime working and driver fatigue, which infringes upon drivers’ rights on remuneration and rest.”
Li did not name any specific companies among the country’s 236 ride-hailing enterprises or outline a timetable on when the rules would take effect.
Didi Global, which operates ride-hailing app Didi Chuxing, saw its stock plunge 6.5% to $7.92 in U.S. trading on Wednesday after the announcement. The shares have seen 43% of their value wiped out since the firm’s debut on the New York Stock Exchange on June 30.
The stock decline dragged down the wealth of Didi’s chairman and CEO, Cheng Wei, by another $170 million. The former Alipay executive now has a net worth of $2.5 billion derived from his stake in Didi, according to the Real-Time Billionaires List.
On Monday, Chinese state media Global Times said the country’s car-pooling industry was “increasingly becoming the subject of complaints” for charging passengers higher fees and paying drivers less. In response, Didi said it would launch a new feature available in seven cities that allows drivers to see how much they have earned as well as how much their riders have paid.
“There are still many shortcomings in this belated income report,” wrote Didi on its official Weibo account on Monday. “We will continue to optimize the feature and expand the coverage to more cities.”
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The MOT’s announcement adds further to Didi’s growing list of troubles. The ride-hailing giant has been under scrutiny since early last month when the Cyberspace Administration of China removed Didi’s app from the country’s app stores and launched a probe on the company over alleged data violations.
The investigation came only days after Didi went public with a $4.4 billion initial public offering in the U.S. Media reports say the firm pushed ahead with the listing even though the internet regulator had asked for a delay.