China’s crackdown on the nation’s Internet giants gathered pace over the weekend with ride-hailing giant Didi Chuxing the latest company to face regulatory scrutiny over issues ranging from data security and use to antitrust
(AF) China’s cyberspace administration ordered app stores to remove Didi Chuxing, delivering a heavy blow to the ride-hailing company that only days ago began trading on the New York Stock Exchange after one of the biggest US stock listings of the past decade.
The cyberspace regulator said on Sunday it acted because Didi had illegally collected users’ personal data.
Didi responded via its social media account, saying it had already stopped registering new users and would remove its app from online stores.
It also said it would make changes to comply with rules and protect users’ rights.
The action against Didi is the latest in a series of clampdowns on home-grown technology giants over antitrust and data security concerns.
Alibaba Group Holding unit Ant Group and Meituan are among others to have fallen foul of regulatory scrutiny as the authorities seek to tighten control over the ways Internet giants collect and use user data.
Didi’s New York-listed shares started trading on Wednesday after an initial public offering worth $4.4 billion. It was valued at around $70 billion by the close of its first day of trading.
Didi’s shares listed at $14 and rallied initially before falling roughly 5% on Friday, when a probe into the firm on grounds of “national security and public interest” was announced by China’s cyberspace administration.
The cyberspace administration said on Sunday that “after testing and verification” the Didi app was found to have “serious violations of laws and regulations in collecting and using personal information.”
It ordered Didi to “strictly follow the legal requirements and refer to relevant national standards to…rectify existing problems (and) effectively protect the personal information security of users.”
The ban will not prevent existing users of Didi in China from using the app to order rides, but it will create uncertainty about potential future regulatory risks for the firm.
It threatens a rough ride for the company’s shares when trading recommences on Tuesday. Monday is a public holiday in the US following its July 4th national celebration.
Didi is backed by Japan’s SoftBank and Uber as well as Chinese giants Alibaba and Tencent. It was founded in 2012 by Cheng Wei.
This story was updated with additional details, official comments, and a link added.