On Sunday, China’s cyberspace regulator blocked Didi Chuxing, the Chinese ride hailing company from App stores in China. This came just days after the company pulled off one of the largest U.S. initial public offerings, raising $4.4 billion.
According to the Cyberspace Administration of China, the company committed serious violations in its collection and usage of personal information. This decision came after just two days the regulator said it was carrying out a cybersecurity review of the company.
Didi Chuxing is China’s biggest ride hailing company. It is famously known for muscling Uber out of China five years ago, forcing Uber to sell its operations to the Chinese company after an expensive price war.
This ban means that no new person other than the 500 million current users can use the app. The app cannot be downloaded as it has been removed in app stores in China, operated by the likes of Apple Inc. and smartphone makers Huawei Technologies Co. and Xiaomi Corp.
The regulator ordered Didi to fix its problems following legal requirements and national standards, and take steps to protect the personal information of its users.
Accordingly the ride-hailing company stated that it had already stopped new user registrations as of July 3 and was now working to rectify its app in accordance with regulatory requirements.
In recent times, the Chinese regulator has been going after internet giants due to their growing influence in and outside China. It claims it is trying to tighten the ownership and handling of sensitive user information.
This has become the norm for the Chinese regulatory body with the listing of Chinese companies in the US Stock market.
Alibaba’s Ant Financial was set to list in the US stock market in November 2020 to raise $37 billion but had to abandon this when the regulatory body launched an investigation into the parent body’s operations alleging monopolistic practices. The regulatory body also summoned affiliate Ant Group Co. to a high-level meeting over financial regulations, escalating scrutiny over the twin pillars of billionaire Jack Ma’s internet empire.
After the investigation, Alibaba was slammed with a $2.75 billion fine for reportedly violating anti-monopoly law. The regulators said the internet giant had abused its dominant market position for several years. The fine amounted to 4% of Alibaba’s revenue in 2019.
CNN reports that the regulatory body has started investigating three other major technology services, citing concerns about national data security. On Monday, China’s cybersecurity watchdog announced probes into truck-hailing platforms Yunmanman and Huochebang (China’s two major truck-hailing apps), as well as job listing site Boss Zhipin. These companies under investigation recently went public in the US stock market. During the investigation, new users cannot register for these three apps.
Since its founding in 2012, Didi has undergone a number of private fundraising rounds, raising tens of billions of dollars from venture capital or major tech firms. According to its IPO prospectus, SoftBank Vision Fund is currently the largest shareholder of Didi, with a 21.5% stake.
