November 30, 2023

China’s government ordered that Didi, the country’s leading ride-hailing platform, be removed from app stores just last week because of “serious” issues related to the collection and use of customer data.

In its brief announcement late Sunday evening, China’s internet regulator, the Cyberspace Administration of China, did not state 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 ensure the security of the personal data of all users”.

On Friday, the same regulator published another surprising evening announcement, in which it said that the registration of new users with Didi would be suspended while the authorities conduct a “cybersecurity clearance”. The agency didn’t say what prompted the review.

That announcement, made just two days after 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 stated that users who already had the Didi app on their phones 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 pushing harder to contain Didi.

Didi has been China’s leading ride-hailing app since 2016 when it bought Uber’s stores in the country after 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 in April for antimonopoly violations. Shortly afterwards, China’s antitrust authorities began investigating food supplier Meituan for similar reasons. Other major Internet companies, including Didi and TikTok’s parent company ByteDance, have been summoned before regulators and instructed to “put the nation’s interests first”.

China’s internet regulator has also named hundreds of apps that it says excessively collect or improperly use personal data. These include apps developed by some of China’s best-known internet companies, including ByteDance, Tencent, and Baidu. But in these cases the regulator only requires that the app manufacturers fix the problems within a certain period of time. It didn’t instruct mobile stores to remove the apps.