The Chinese government has ordered the removal of Didi, the country’s leading ride-hailing platform, from app stores due to “serious” issues with the collection and use of customer data, the latest blow dealt by Beijing to the company, which went public on the New York Stock Exchange just this week.
The Cyberspace Administration of China, China’s internet regulator, did not explain what problems it had discovered in its brief late-evening announcement on Sunday, only that its decision was based on information that was reported to it, then tested and verified. Didi was ordered by the regulator to correct the issues and to “earnestly safeguard and expand the security of personal user data.”
The same regulator made another surprise evening announcement on Friday, saying that new Didi user sign-ups would be suspended while authorities conducted a “cybersecurity review.” The agency did not elaborate on 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 stock price to fall 5% on Friday.
It was unclear whether Didi’s removal from app stores on Sunday was related to the cybersecurity review; however, with new user registrations already halted, the practical impact of the app’s removal from stores is likely to be limited.
Didi expressed “sincere gratitude” to the government for its guidance in a statement posted on Chinese social media on Sunday evening, saying it would resolve the issues “conscientiously.” Users who already have the Didi app on their phone will be unaffected, according to the statement.
The two moves by the internet regulator in quick succession, especially coming so soon after the company raised billions of dollars in its Wall Street debut, indicate an intensifying effort by Beijing to crack down on Didi.
Didi has been China’s leading ride-hailing app since 2016, when it purchased Uber’s operations in the country, following a period of intense head-to-head competition between the two companies. Didi reported 377 million active users in China in the fiscal year that ended in March. It is also present in 16 additional countries, including Australia, Brazil, Japan, Mexico, and South Africa.
In recent months, Beijing has increased regulatory pressure on Chinese internet companies, accusing them of unfairly competing against rivals and exploiting consumers’ data to increase profits.
In April, Alibaba, the e-commerce behemoth, was fined a record $2.8 billion for antitrust violations. Soon after, China’s antitrust authority launched a similar investigation into the food-delivery giant Meituan. Other major internet companies, such as Didi and TikTok’s parent company, 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 claims collect excessive amounts of personal data or use it inappropriately. Some of the apps were developed by some of China’s most prominent internet companies, including ByteDance, Tencent, and Baidu. However, in those cases, the regulator simply required the app developers to fix the issues within a certain time frame. It did not order the apps to be removed from mobile stores.