Didi goes public on June 30, 2021, is valued at $68 billion. Two days later, on the evening of July 2, the Cyberspace Administration of China, the country’s internet regulator, announced that it was reviewing Didi’s cybersecurity. On Chinese social media, rumors spread that Didi sold sensitive user information and traffic data to the US, creating a national security risk. Didi’s manager denied the allegation.
On July 4, the regulator issued a notice claiming Didi had illegally collected and used riders’ personal data, and ordered app stores to remove the app. A year later, the Cyberspace Administration decided that the company had violated three laws governing cybersecurity, data privacy, and the protection of personal information—all of which took effect only after ban was announced.
At the time, some analysts suggested that the data security threats were aimed at persuading Didi to delist in the US and move the IPO to Hong Kong, and that the ban and the allegations against it were punishment for defying Beijing’s wishes.
Other tech companies have certainly taken the cue, and some — including content-sharing app Little Red Book, podcast platform Himalaya, and freight service platform Huolala — have shelved the plan. plans to issue shares to the public in the United States.
The pressure on Didi is just one part of a much broader crackdown on big Tech companies in China. In November 2020, the IPO of fintech giant Ant Group was suspended after its founder, Jack Ma, criticized China’s financial regulators. At least a dozen companies, including tech corporations Tencent And alibabasearch giant BaiduAnd Meituan Food Delivery Company used to investigated and fined under antitrust rules. In mid-2021, the ban on after-school tutoring went into effect wiping billions of dollars off the value of China’s educational technology sector.
Rui Ma, a China technology analyst and founder of Tech Buzz China, said: “The tech industry has learned not to bother with regulatory requests, because they will take action. aggressively if necessary. “Especially in the case of Didi, where it was rumored that the company was explicitly told not to list.”
After Didi is cut off from the app store, passengers and drivers who have registered previously can still use the service normally, but cannot create new accounts. It sounds like a harsh punishment, but it comes at a time when the ride-hailing industry has stalled.
Government statistics show that the number of carpooling service users peaked in December 2018, at 389 million. Over the next two years, that number dropped to 365 million. The percentage of users who book a car regularly dropped at the same time, largely due to the Covid-19 pandemic and strict lockdowns across most of China.
Jeff Li, a technology analyst and former director of consulting firm Accenture China, told WIRED that by the time the Didi Chuxing app was removed from app stores, most of the land’s potential customers were country has an account.
Second-tier ride-hailing companies see Didi’s suspension from app stores as a great opportunity to gain market share and Start fundraising! Spending on marketing and promotions for drivers and customers. Meituan launched a new carpooling app in July 2021 and within two months it was rolled out in over 200 cities. In September 2021, B2C ride-sharing platform Caocao Travel announced it had completed a Series B worth RMB 3.8 billion ($560 million). The following month, its competitor T3 announced it had received a Series A worth RMB 7.7 billion ($1.1 billion). The new apps used cash to expand into new cities and offer incentives to attract drivers.
