China orders Didi app downloads suspended over data violation

China’s cyberspace regulator has ordered smartphone app stores to stop offering Didi Global’s app after finding that the ride-hailing company illegally collected users’ personal data.
Didi Chuxing and VC funding
The Cyberspace Administration of China (CAC) said it had told Didi to make changes to comply with Chinese data protection rules, four days after Didi began trading on the New York Stock Exchange, having raised $4.4 billion in an initial public offering.

The CAC did not specify the nature of Didi’s violation in a statement on its social media feed.

Didi responded by saying it 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.

China has been clamping down on its home-grown technology giants over antitrust and data security concerns.

Didi made its trading debut on Wednesday in an IPO that valued the company at $67.5 billion, well down from the $100 billion it had hoped for, which potential investors had resisted.

Redex Research director Kirk Boodry, who publishes on Smartkarma, said the CAC’s move appeared aggressive.

Didi’s app was still working in China for people who had already downloaded it. It offers over 20 million rides in China every day, on average.

Didi, which offers services in China and more than 15 other markets, gathers vast amounts of real-time mobility data every day. It uses some of the data for autonomous driving technologies and traffic analysis.

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.”

A notice on Didi’s China app showed it had updated its user information and data privacy policy on June 29, the day before its trading debut. In a statement to Reuters, Didi described the move as a “regular update” after adding two new services on the app under its chauffeur business.

Founded by Will Cheng in 2012, the company had previously been subject to regulatory probes in China over safety and its operating licence.

Didi Global said on Sunday that the removal of its DiDi Chuxing app from smartphone app stores in China is expected to have an adverse impact on its revenue, Reuters reported.

The company expects that the app takedown may have an adverse impact on its revenue in China.

In a June filing, Didi reported revenue of about 42.2 billion yuan ($6.5 billion) for the three months ended March 31. Of that, 39.2 billion yuan came from its China mobility division while about 800 million yuan came from its international business.

Didi has a dominant position in the online ride-hailing business in China and operates in 4,000 locations across 16 countries