Didi Chuxing vs China Government Saga After The IPO - What the ... ?

Didi: China blocks ride-hailing app over privacy breach

One of the country's biggest ride-hailing services has been ordered off app stores over "serious violations" related to customer privacy. The decision comes just after Didi's massive IPO.

China's cyberspace regulator on Sunday ordered app stores to remove Didi Global Inc as the ride-hailing service overhauls its handling of customer data. The announcement of the ban came just days after the company's New York Stock Exchange debut.

The Cyberspace Administration of China (CAC) said an investigation found "serious violations" in how Didi collected and used personal information.

A statement said Didi was told to "rectify problems." It did not give further details but said the company was barred from accepting new customers until the probe was completed.

Ban follows massive IPO

Earlier this week, Didi pulled off one of the biggest initial public offerings (IPO) of the past decade, raising $4.4 billion (€4.6 billion) from investors in its New York stock listing.

On Friday, CAC announced that it was starting a cybersecurity review of the company, prompting Didi shares to fall 5.3%.

The timing of CAC's announcements followed the Communist Party’s 100th-anniversary celebrations in Beijing.

Dozens of social media and e-commerce firms have been told to handle customer information more carefully as the party intensifies control over influential tech giants. Some have been told to collect less information.

In April, the Alibaba Group, the world's biggest e-commerce platform, was fined $2.8 billion on charges of violating anti-monopoly rules.

Didi reacts to ban

Didi said it would "strictly comply," without elaborating.

Customers who downloaded the Didi app before the ban can keep using it normally, the company said in a statement on its social media account.

Didi was founded in 2012 as a taxi-hailing app and has expanded to include ride-hailing services with including private cars and buses. The Chinese firm says it's also investing in artificial intelligence and electric cars.

The rest of the world, which to the most part does not include China, uses American apps; Google, Twitter Facebook, Uber, and their associated services, and among many other super apps by Western tech corporations are absent in China. This is not new information, and it does not mean that the Chinese are locked out from the benefits of these services because the world’s most populous country replicates or clones such tools for its natives.

 

Case in point here is Uber, which, as said, is not available in China. However, there is Didi, which offers the same services as the American super-app, and is huge by all standards, including it being listed in the U.S. just the other day.

Didi has since been ordered off app stores by Beijing following issues related to the collection and use of customer data.

Here is the statement that was issued by the Nation Internet Information Office in China:

According to the report, after testing and verification, “drip travel” app there are serious violations of the law and the collection and use of personal information. The State Internet Information Office, in accordance with the relevant provisions of the Cyber Security Law of the People’s Republic of China, notified the App Store to take off the “drip travel” app, requiring drip travel technology Co., Ltd. to strictly follow the legal requirements, refer to the relevant national standards, seriously rectify the existing problems, and effectively protect the security of the personal information of the vast number of users.

The statement does not reveal the specifics of the problems linked to banning the app. Chinese internet regulators have only stated that they received information about the security issues, tested the information, and eventually verified it.

Just the other day, Chinese internet regulators announced that new sign-ups for Didi would be suspended to examine a security concern. You should note that Didi had been listed two days earlier, and this development led to a fall in share price.

The Sunday blow (Didi being called off stores) could be connected to the review that halted the addition of new customers in Didi, although such a statement has not been revealed.

The moves can be extrapolated to indicate the manner the Chinese government regulates its internet space with an iron fist, and in cases where Americans are part of the process.

Launched in 2016, Didi purchased Uber operation in China and has 377 million active users in China alone. It also runs operations in other countries such as Brazil, Australia, and South Africa, and 13 others.