China’s cyberspace regulator has ordered smartphone app stores to pull Didi Global Inc’s app after it alleged the ride-hailing company had “illegally collected users’ personal data”.
On Sunday, the Cyberspace Administration of China (CAC) said it had told Didi to make changes to comply with data protection rules, four days after its initial public offering (IPO) in New York, which raised $4.4bn (£3.2bn) – the biggest Chinese overseas IPO in the first half of the year.
The CAC in its statement also urged Didi to “earnestly rectify and reform existing problems, and to conscientiously ensure the personal information security of the numerous users”.
Didi responded by saying it had stopped registering new users and would remove its app from app stores. It said it would make changes to comply with rules and protect users’ rights.
“We sincerely thank the responsible departments for guiding Didi to inspect the risks,” the company said on Chinese social media on Sunday night, vowing to “conscientiously rectify” these issues.
The company also said in a separate statement to investors that it expected the app takedown may have an “adverse impact” on its revenue in China.
Some observers believe the move against Didi is part of a continuing crackdown by the Chinese authorities on what was once a loosely regulated technology sector. It follows government actions in recent months aimed at the online marketplace Alibaba, and social networks Tencent and Bytedance, the parent company of TikTok.
The government has also been ramping up its efforts to safeguard the nation’s data security and cybersecurity. In April, a dozen government agencies issued cybersecurity review measures, requiring critical information infrastructure operators to conduct network security reviews for technology products and services they procure that are relevant to national security or have the potential to be.
On Friday, Beijing announced it had launched an investigation into Didi in order to “safeguard national data security, maintain national security and protect public interest”.
CAC also announced plans to investigate the truck-hailing service Full Truck Alliance over data security issues. The company raised $1.6bn in New York last month and has a market valuation of more than $20bn.
Didi’s app was still working in China for people who had already downloaded it. The ride-hailing service – with more than 377 million active users and 13 million drivers across China – made its trading debut on Wednesday in an IPO that valued the company at $67.5bn, well down from the $100bn it had hoped for.
It uses some of the data for autonomous driving technologies and traffic analysis. Didi’s vice-president, Li Min, said on Saturday the servers that stored the data were located in China. “Like many overseas-listed Chinese companies, Didi stores all domestic user data on servers in China. It is absolutely impossible to pass data on to the United States.”
Didi had flagged Chinese regulations in its IPO prospectus and said: “We follow strict procedures in collecting, transmitting, storing and using user data pursuant to our data security and privacy policies.”
Founded in 2012 by Will Cheng at the age of 29, Didi has become one of China’s largest ride-hailing services. Cheng, who keeps a low profile, is also the chair and chief executive.
Internationally, it is often Jean Liu – the daughter of Liu Chuanzhi, the founder of Lenovo Group, the world’s largest PC vendor – who represents the company.
The company had previously been subject to regulatory inquiries in China over safety and its operating licence.
With contributions from Reuters.