China Orders Didi Off App Stores in Escalating Crackdown

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Last Updated on July 4, 2021 by admin


China’s government ordered the country’s leading ride-hailing platform, Didi, removed from app stores for “serious” problems related to the collection and use of customer data, the latest blow by Beijing to the company, which went public on the New York Stock Exchange just this past week.

In its brief late-evening announcement on Sunday, China’s internet regulator, the Cyberspace Administration of China, did not explain what problems it had found, only that its decision had been based on information that was reported to it, then tested and verified. The regulator ordered Didi to correct the problems and to “earnestly safeguard the security of all users’ personal information.”

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On Friday, the same regulator had issued another surprise evening announcement, saying that new user sign-ups on Didi would be suspended while the authorities conducted a “cybersecurity review.” The agency did not say what had prompted the review.

That announcement, made just two days into Didi’s life as a publicly traded business on Wall Street, sent the company’s share price falling by 5 percent on Friday.

It was not clear whether Didi’s removal from app stores on Sunday was connected to the cybersecurity review, though with new user registrations already halted, the practical effect of the app’s removal from stores is likely to be limited.

In a statement posted on Sunday evening on Chinese social media, Didi offered “s incere thanks” to the government for its guidance and said it would resolve the problems “conscientiously.” The statement also said that users who already had the Didi app on their phones would not be affected.

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The two moves in quick succession by the internet regulator, particularly coming so soon after the company raised billions of dollars in its Wall Street debut, suggest an intensifying effort by Beijing to rein in Didi.

Didi has been China’s leading ride-hailing app since 2016, when it purchased Uber’s operations in the country after a period of intense head-to-head competition between the two companies. Didi said its 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 been turning up the regulatory heat on Chinese internet companies in recent months, accusing them of competing unfairly against rivals and using consumers’ data to extract greater profits from them.

Alibaba, the e-commerce giant, was fined a record $2.8 billion in April for antimonopoly violations. Soon after, China’s antitrust authority began investigating the food-delivery giant Meituan on similar grounds. Other major internet companies, including Didi and TikTok’s parent, ByteDance, have been summoned before regulators and ordered to “put the nation’s interests first.”

China’s internet regulator has also named hundreds of apps that it says collect personal data to excess or use it in improper ways. Among them are apps created by some of China’s most prominent internet companies, including ByteDance, Tencent and Baidu. But in those cases, the regulator has required only that the app makers fix the problems within a certain amount of time. It did not order mobile stores to remove the apps.



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