Why China Eases Regulatory Restraints on Two Tech Platforms

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China Eases Regulatory Restraints on Two Tech Platforms

Full Truck Alliance Co. and Kanzhun Ltd. resume registering new users after yearlong cybersecurity probe

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By Raffaele HuangFollow

and Liza LinFollow

June 29, 2022 9:51 am ET

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Two Chinese technology companies said they have resumed registering new users, the latest sign Beijing is dialing back a regulatory campaign that had hurt economic activities in the country’s tech sector.

Logistics platform Full Truck Alliance Co. YMM -1.32%▼ and online recruitment firm Kanzhun Ltd. BZ 4.60%▲ said Wednesday that Chinese authorities lifted a ban preventing the companies from registering new users, signaling the end of a year-long cybersecurity probe.

The two companies had come under scrutiny shortly after listing in the U.S., as part of regulatory moves that also had enveloped ride-hailing giant Didi Global Inc. DIDIY 9.05%▲ just two days after its U.S. listing last year. The moves led some Chinese companies to hold off on plans to go public in the U.S.

Full Truck Alliance and Kanzhun posted separate but almost identical statements on China’s Twitter-like Weibo platform, saying that they had rectified security issues identified during the investigations and promising to ensure the safety of data and the platform infrastructure going forward. The Wall Street Journal had earlier reported the impending lifting of the user ban.

China’s cybersecurity regulator last July opened a probe into Full Truck Alliance and Kanzhun, which runs the online job portal Boss Zhipin, and banned them from adding new users, citing national security and data-security concerns. Chinese officials launched on-site inspections at the companies’ offices and questioned senior executives as part of their investigations.

The companies, which had listed in the U.S. less than a month earlier, said at the time that they would fully cooperate with the review. Didi became subject to a similar cybersecurity probe around the same time, with regulators suspending its ability to register new users on its apps and removing them from Chinese app stores.

All three companies saw the value of their American depositary receipts plunge in the wake of the regulatory action.

Last month, Didi’s shareholders approved its plan to delist from the New York Stock Exchange, a step that would allow the company to move forward with the Chinese investigators. Its delisting took effect earlier this month.

The Wall Street Journal earlier also reported that the investigators plan to allow Didi to bring back its apps soon, though there has been no official word about an end to the Didi investigation.

The Cyberspace Administration of China didn’t immediately respond to a request for comment.

This year, on the afternoon of June 6, some apps run by Full Truck Alliance briefly started to allow new-user registration, though the service was pulled after a few hours without any explanation.

Chinese authorities have taken several steps in recent months to relax a campaign to rein in its powerful technology companies, an acknowledgment of the economic damage brought by almost two years of new regulations, which officials have said were aimed at preventing monopolistic behaviors and other social ills.

Even so, China’s cybersecurity regulators earlier this month launched a probe of the country’s biggest academic database, China National Knowledge Infrastructure. The investigators said the probe aims to pre-empt risks related to the security of national data, as CNKI manages a cache of sensitive data for key industries such as defense and infrastructure.