China’s cyberspace regulator has announced that it has ordered smartphone app stores to stop offering Didi Global Inc’s app after finding that the ride-hailing giant 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 Chinese data protection rules, four days after Didi began trading on the New York Stock Exchange, having raised $4.4bn 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 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.
“The Company expects that the app takedown may have an adverse impact on its revenue in China,” the company said in a statement.
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China has been clamping down on its homegrown technology giants over antitrust and data security concerns. Didi is the latest Chinese tech unicorn to be targeted by authorities after Alibaba’s fintech arm Ant was forced to halt a record-breaking IPO last November.
Didi 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, which potential investors had resisted.
Redex Research director Kirk Boodry, who publishes on Smartkarma, said the CAC’s move appeared “aggressive”. “(It) indicates the process could take a while, but they have a large installed base so near-term impact (is) likely muted for now,” he said.
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.
CAC on Friday announced an investigation into Didi to protect “national security and the public interest“, prompting a 5.3% fall in its share price to $15.53. The stock was sold at $14 a share in the IPO – the top of the indicated range.
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 29 June, 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.