The news: Two days after its US IPO, ride-hailing service Didi Chuxing was investigated by the Cyberspace Administration of China (CAC). Regulators claimed serious violations of collection and usage of personal information and ordered the removal of apps from Chinese App stores, per The Economist. Didi, which is the biggest ride-hailing service in China with half a billion users, said it had stopped registering new users and would adhere to data protection rules.

Shares of Didi fell as much as 30% as trading opened at the NYSE yesterday, wiping out $22 billion of market value and driving the stock down below its $14 IPO price.

More on this: The Chinese government’s accelerated crackdown on its biggest tech firms has resulted in $42 billion in losses for Nasdaq’s Golden Dragon China Index, per The Edge Markets. Continuing regulator reprisal may force Chinese Big Tech firms seeking IPOs to postpone their plans, or go public in Hong Kong, Shanghai, or Shenzhen exchanges instead.

“The Chinese government’s tactics appear to have the twin purposes of keeping its corporate leaders in check while also making sure the investor pain lands primarily in the US more so than China,” said Michael O’Rourke, chief market strategist at JonesTrading.

• Chinese regulators derailed the IPO plans of finance leader Ant Group in November last year.
• In March, Chinese President Xi Jinping called on the need to regulate ”platform companies,” or online services, to maintain social stability.
• Alibaba in April received a record $2.8 billion fine after an antitrust probe revealed it had abused market dominance.

Why it matters: China’s State Council said it will improve laws on data security, cross-border data flow, and management of confidential information. In addition, the council said it is increasing supervision and revising rules for overseas listings of Chinese companies, per Yahoo Finance. Enforcing strict privacy and data sovereignty laws can rein in the power of Big Tech companies.

Like many of its competitors, Didi grew to be a tech giant without comprehensive government oversight, until now. By pursuing a US IPO, Didi sidestepped an extensive approval process by China’s securities regulator during a time when the Chinese government is pushing for firms to raise funds in local markets.