Didi seemed invincible. It wasn't.

Hi all, this is Zheping in Hong Kong. China’s ride-hailing giant Didi had a fast rise and an even faster fall, but first…Today’s must-reads: [View in browser]( [Bloomberg]( Hi all, this is Zheping in Hong Kong. China’s ride-hailing giant Didi had a fast rise and an even faster fall, but first… Today’s must-reads: - After reaching a deal with Elon Musk, Twitter suspended product changes to prevent [miffed employees]( from “going rogue” - The $11 billion payments startup whose co-founder said the Valley was run by “mob bosses” [is being sued]( by its most prominent customer - Robinhood is [dismissing 9%](of its 3,800-person workforce Didi in limbo Back in 2016, Didi Global Inc. founder Cheng Wei—a cherubic, bespectacled former salesman—was on top of the world. His then-four-year-old startup had just [kicked Uber Technologies Inc.]( out of China. Cheng was celebrated as a national champion who defied the odds and defeated a Silicon Valley superpower. His company prevailed by focusing on taxis instead of private cars, engaging in low-tech, on-the-ground promotions, even covering drivers’ traffic citations and other penalties. A better knowledge of the local market, coupled with more aggressive tactics, helped. Now, [Didi is in crisis](—at the uncomfortable center of Beijing’s tech scrutiny and on the verge of delisting its stock. To understand how it got here, it’s helpful to have a little background. In June, the company raised $4.4 billion in the second-largest U.S. stock market debut by a Chinese firm. Just two days later, everything unraveled. After Didi’s U.S. listing, Beijing’s internet watchdog kicked off a cybersecurity review of the firm, citing the need to safeguard national security. It forced Didi’s main apps off stores in China. Its shares plummeted, before regulators proclaimed they would tighten up on almost every foreign initial public offering going forward. People familiar with the situation say the regulators [had asked]( Didi privately to delay the IPO because of the data concerns, but Cheng went ahead anyway. Didi has since lost more than four-fifths or roughly $60 billion of its market value. More recently, senior Beijing officials have pushed back on a set of proposed punishments for Didi submitted by the internet regulator, feeling they were too lenient, according to a [Bloomberg exclusive last week](. The decision puts Didi’s fate in limbo and we are now in unchartered territory: Didi will soon delist its U.S.-traded shares—a decision that will almost certainly pass during a May 23 shareholder meeting—but it has suspended plans to move to another bourse, like Hong Kong, pending Beijing’s permission. Investors like Softbank Group Corp. will have to trade the stock over-the-counter on the pink-sheet markets, while others could be forced to sell because their mandates don’t allow them to hold unlisted shares. Didi’s quarterly print isn’t looking pretty either. Revenue dropped 13% to 40.8 billion yuan ($6.2 billion) for the three months ended December. The March-quarter results are likely to look even worse after Covid lockdowns in big cities like Shanghai and Shenzhen. Some would argue that Didi could have avoided all the hassle by, say, cooling their heels for a few weeks (instead of pushing through the IPO). But in many ways, Beijing’s scrutiny on Didi and its internet peers was inevitable because of the data and influence they amassed through a decade of unfettered expansion. Even the creation of Didi was an example of the way the game is played. Rainmakers Tencent Holdings Ltd. and Alibaba Group Holding Ltd. agreed to merge two rival ride-hailing startups they backed, ending years of expensive price wars and laying the foundation for Didi’s near-monopoly. It’s unlikely Beijing would approve of such a deal today. “China will become the leading country in the world for the sharing economy,” Cheng told my colleagues in a 2016 interview, months after Uber exited China. That could still happen, but it will be on Beijing’s terms, not Cheng’s. —[Zheping Huang](mailto:zhuang245@bloomberg.net) The big story It’s earnings season. On Wednesday, Microsoft’s cloud revenue grew 32%, and its [shares soared](. Stung by its rivalry with TikTok, a [YouTube sales slowdown]( weighed on Google’s results. And Tesla wiped [$126 billion]( off its valuation. What else you need to know Major technology companies have been duped into disclosing customers’ [sensitive personal information](, and the data has been used to harass and even sexually extort minors. Musk’s Twitter deal includes a $1 billion [termination agreement](. What does “free speech” mean to Musk? Investor David Sacks, Bloomberg’s Tim O’Brien and Emily Chang [debate](. Follow Us More from Bloomberg Dig gadgets or video games? [Sign up for Power On]( to get Apple scoops, consumer tech news and more in your inbox on Sundays. [Sign up for Game On]( to go deep inside the video game business, delivered on Fridays. Why not try both? Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights.​​​​​​​ You received this message because you are subscribed to Bloomberg's Fully Charged newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](