China Orders Didi Off App Shops in Escalating Crackdown

0
90

China’s government ordered that Didi, the country’s leading ride-hailing platform, be removed from app stores just last week because of “serious” issues related to the collection and use of customer data.

In its brief announcement late Sunday evening, China’s internet regulator, the Cyberspace Administration of China, did not state what problems it had identified, only that its decision was based on information reported to it, then tested and verified. The regulator instructed Didi to fix the problems and “seriously protect and enhance the security of users’ personal data”.

On Friday, the same regulator issued another surprise evening announcement saying that Didi’s registration of new users would be suspended while the authorities conduct a “cybersecurity clearance”. The agency didn’t say what prompted the review.

That announcement, made just days into Didi’s life as a publicly traded company on Wall Street, caused the company’s share price to drop 5 percent on Friday.

It wasn’t clear if Didi’s removal from the app stores on Sunday was related to the cybersecurity review, although the practical impact of removing the app from the stores is likely to be limited as new user registrations have already stopped.

In a statement posted on Chinese social media on Sunday evening, Didi expressed “sincere thanks” to the government for its guidance and said it would “diligently” resolve the issues. The statement also states that users who already have the Didi app on their phone will not be affected.

The two steps taken by the Internet regulator in quick succession, particularly so shortly after raising billions of dollars on its Wall Street debut, suggest that Beijing is cracking down on Didi.

Didi has been China’s leading ride-hailing app since buying the Uber stores in the country in 2016 after a period of intense head-to-head competition between the two companies. Didi said his service had 377 million active users in China in the year that ended in March. It also operates in 16 other countries, including Australia, Brazil, Japan, Mexico and South Africa.

Beijing has increased the regulatory heat on Chinese internet companies in recent months, accusing them of competing unfairly with competitors and using consumer data to generate greater profits for them.

Alibaba, the e-commerce giant, was fined a record $ 2.8 billion in April for antimonopoly violations. Shortly afterwards, China’s antitrust authorities began investigating food supplier Meituan for similar reasons. Other major Internet companies, including Didi and TikTok’s parent company ByteDance, have been summoned before regulators and instructed to “put the nation’s interests first”.

China’s internet regulator has also named hundreds of apps that it says excessively collect or improperly use personal data. Apps include apps created by some of China’s most famous internet companies, including ByteDance, Tencent, and Baidu. In these cases, however, the regulatory authority only required the manufacturers of the apps to fix the problems within a certain period of time. It didn’t instruct mobile stores to remove the apps.