Didi Chuxing encounters unthinkable bad luck: Business activities suddenly froze when investigated by 7 state agencies, the risk of an unprecedented fine

Ride-hailing giant Didi is under great pressure as yesterday, a source said that Beijing was considering a series of harsh penalties for the company. A source from Bloomberg revealed that the penalties for Didi are being selected including a huge fine or even forcing them to delist from the US exchange.

Didi shares immediately fell more than 10%, resulting in a total loss of 27% this month in value.

Last week, officials from seven government agencies visited Didi’s office to check on the security issue.

Earlier this month, the Chinese government ordered app store operators across the country to immediately remove Didi Chuxing’s mobile app.

Specifically, the Cyberspace Administration of China (CAC) mentioned “serious problems” related to Didi Chuxing’s unauthorized collection of personal data. In addition, they also directed Didi Chuxing to immediately solve these problems to “ensure the safety of personal information for users”.

Beijing’s order comes just two days after authorities banned Didi Chuxing from adding new users while authorities were reviewing the company’s security practices.

Earlier, a notice on Didi’s app on June 29 – a day after the US IPO talked about new changes to user information and personal data policy that will take effect from 7/7. .

Didi has a near monopoly in the ride-hailing market in China and collects a wealth of data from users – to analyze traffic habits and develop technologies including self-driving cars.

The CAC has not yet detailed whether Didi’s user data access breaches, nor how long Didi will have to resolve the issue, or when Didi’s apps can reappear on the app stores.

What Didi is experiencing is part of a series of actions by authorities to rein in China’s big tech companies, which have become the center of daily life for more than a billion people. This is also to assert that the Chinese government will have more control over the data these companies hold. China has moved from one of the laxest data control regimes in the world to one of the world’s most heavily regulated data regimes, starting with a cybersecurity law in 2017, tightening Beijing’s control over data flows.

It is worth mentioning that bad luck came to Didi just a few days after Didi raised about $ 4.4 billion after its IPO in the US.

“Regulators are making it clear to Chinese tech companies that they can IPO wherever they go,” said Kendra Schaefer, head of technology policy at Trivium China, a consulting firm. want, as long as their ‘home’ is in China and strictly adheres to domestic laws and regulations.” Banning Didi from accepting new users essentially freezes the company’s main business in China and makes it impossible for them to grow. More than two-thirds of Didi’s roughly half a billion global users are in China.