Chinese regulators have ordered that ride-hailing service Didi is removed from app stores as investigations into its misconduct continue. The order, which was released yesterday, instructed the company to undergo changes to comply with China’s data protection laws.
The app still works for existing users but no new user can download the app for the time being. A statement by Didi accepted that the punishments would have a negative impact on their business.
The Company will strive to rectify any problems, improve its risk prevention awareness and technological capabilities, protect users’ privacy and data security, and continue to provide secure and convenient services to its users. The Company expects that the app takedown may have an adverse impact on its revenue in China.
Didi’s statement
Yesterday’s crackdown happened just two days after the Cyberspace Administration of China announced an investigation into “national data security risks” on 2 July. This led to Didi’s shares dropping by 5.3%.
It has been a busy week for Didi. On top of the investigations, the company debuted on the New York Stock Exchange on 30 June. Raising $4.4 billion, it became the second-largest IPO by a Chinese company in the US in history, following Alibaba’s listing in 2014.
The hashtag “#Didi Travel app was removed” (#滴滴出行App下架) gained 1.44 billion views on Weibo. Netizens pointed out that some of Tencent and Weibo’s senior management team are shareholders of Didi. Many also commented that regulators should do a thorough investigation into Didi’s data abuses.
China’s equivalent to Uber, Didi also offers food delivery, bike-sharing, e-bikes and is investing heavily into autonomous driving services. It also counts big names such as Apple, SoftBank, Tencent, and Uber as investors. In 2020, Didi brought in a revenue of 141.7 billion RMB ($21.9 billion), slightly lower than 2019’s 154.8 billion RMB.
Didi has over 377 million users in China alone, and the company provides more than 25 million ride-hailing services in the country every day. Seeking to rival Uber, the company has expanded to more than eleven overseas markets.
Didi is the latest target of the state’s crackdown on tech companies as it tries to increase competition within the market by enforcing anti-monopolistic laws and data privacy regulations. Earlier this year, Alibaba Group was handed a record 18.2 billion RMB ($2.8 billion) fine by antitrust regulators. Tencent and Meituan are among other tech giants to be probed by regulators.
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