China’s investigative campaign against Big Tech has claimed a new victim. In this case, Didi Chuxing, the leading car-sharing company and equivalent to Uber in the West. As announced by the regulatory authority this Sunday, it has asked the platforms of the Chinese applications to stop offering that of this company, after determining that Didi had “illegally collected personal data of its users.” The platform has 490 million active users and 13 million drivers across China.
On Friday, the China Cyberspace Administration announced the opening of an investigation into the company to protect “national security and the public interest.” Two days earlier, Didi had started trading in New York, in the largest IPO in this market so far this year.
Last Friday, when the investigation against her was released, the price of Didi fell 7%. On its first day of trading on the New York Stock Exchange, it had reached a valuation of 68,490 million dollars (55,725 million euros). It had reported losses of 1,600 million dollars (1,348 million euros) and a drop in its income of 8% due to the coronavirus pandemic in its income statement in the last year.
Didi Chunxing is a giant in its sector and in 2016 it even absorbed Uber’s operations in China. Its services are present in China and 15 other countries – from Mexico to Australia, through Brazil, Colombia, Peru and Ecuador – and it collects millions of data from its users every day. In China, it not only offers transportation by car, but also shared bikes, food delivery or financial services. Its app is one of the most popular in the big cities of the country.
The Government investigates the large operators
Founded in 2012 by Will Cheng Wei, who was 29 years old at the time, it has already been the subject of other investigations, one of them regarding its license to operate. Also about the security it offers to its users, after a murder case in 2018 by the driver in one of his services to a client. Last June, Reuters launched an antitrust investigation into alleged practices by the company to drive smaller competitors out of the market.
The investigation into this shared vehicle platform is the latest in a series of inspections undertaken by Chinese regulators in recent months on large Chinese technology companies, which dominate much of the daily activities of the 1.4 billion inhabitants of the most populous country. of the land: from the purchases they make to their investments, through their transport, the information they consult or the delivery of prepared meals at home. All of them companies based in sectors where there are only a handful of competitors – the rest have been expelled – and that generate a large amount of data about their users. In part to respond to that dominance, the Chinese government is accelerating the development of its digital currency, the digital yuan.
The first and largest investigation so far, against e-commerce giant Alibaba, was released in December – a month earlier the authorities had already halted the IPO of Ant, the financial arm of the conglomerate founded by Jack Ma. In April, regulators imposed a € 2.35 billion fine on Alibaba for violating antitrust rules. That same month, the antitrust authorities summoned heads of 34 of the large Chinese technology companies, including Didi.
The investigation against the company seeks to “prevent risks to national data security, guarantee national security and protect the interest of the public,” according to the Cyberspace Administration in a statement distributed on its social networks on Friday. It is the first time that national security – one of the great concerns of the Chinese government – has been expressly alluded to to justify measures against large national technology companies.
Beijing blocks access to the app
Although it has not specified exactly what risks it has detected, it has said that during the investigation it will not be possible for new users to download the Didi application. This platform has assured the Chinese media that it “actively collaborates” with the researchers. In addition to blocking access to the app for new users, Chinese regulators require the platform to correct its violations and comply with Chinese laws and regulations.
In a statement issued on Friday, after regulators made the investigation public, Didi had indicated that “we plan to carry out a comprehensive assessment of cybersecurity risks, and continue to improve our security systems and technological capabilities.”
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.