China’s government ordered that the country’s leading ride-hailing platform, Didi, be removed from app stores because of “serious” issues related to the collection and use of customer data went public only last week on the New York Stock Exchange.
In his short announcement in the late evening On Sunday, China’s Internet regulator, the Cyberspace Administration of China, did not explain 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 new user registrations on Didi would be suspended while 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 Internet regulator’s two moves in quick succession, especially so soon after the company raised billions of dollars on its Wall Street debut, suggest 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 April for antimonopoly violations. China’s antitrust authorities began shortly thereafter Investigations against the grocery supplier Meituan for similar reasons. Other large internet companies, including Didi and TikTok’s parent company, ByteDance, were charged before the supervisory authorities and ordered that “the interests of the nation be put first”.
China’s Internet regulator has also called Hundreds of Apps that it means excessively collecting personal data or using it in an improper way. Apps include apps created by some of China’s most famous internet companies, including ByteDance, Tencent, and Baidu. But in these cases the regulator has only asked 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.