On September 21, Z.AI (02513.HK) fell 4.17% in regular trading, trading at 754.0 HKD/share, with turnover of HKD 526 million. The decline comes as the data privacy controversy surrounding its AI coding tool ZCode continues to intensify despite the company's efforts to contain the fallout.

On the news front, Z.AI announced the formal open-sourcing of ZCode and disclosed that it has invited the China Academy of Information and Communications Technology and NSFOCUS Technology to conduct security audits. The audits confirmed that the relevant cloud storage bucket contains zero residual data and that ZCode v3.14.0 has completed remediation. Z.AI's MaaS platform also announced a forthcoming zero-data-retention feature for enterprise users.

However, these measures have not quelled market concerns. The controversy, which erupted on September 18 after a developer revealed ZCode was silently uploading entire Git repositories to Alibaba Cloud OSS without user consent, has escalated significantly. Taiyuan Chengming Technology formally sent a legal demand letter requiring Z.AI to explain data destinations, potential cross-border transfers, and whether data was used for model training, with a response deadline of October 10. Reports indicate nearly 400 developers have initiated rights claims and multiple enterprises have internally suspended ZCode usage.

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