Not only Uber's competitors: China puts pressure on listed US companies

Influenced Yunman and Hochibang truck brokers from Full Truck Alliance Co., Ltd. and the recruitment agency Boss Zhipin. Like Didi, the three companies are no longer allowed to accept new clients. Regulatory authorities in Beijing recently took action against a number of Chinese internet companies and announced stricter rules for them.

On Sunday, Chinese app stores were instructed by the Cyberspace Agency (CAC) not to offer any other software from US travel agency competitor Uber. “Serious violations” in the handling of personal data were found in Didi. Didi announced that he is working on patching his app as per the requirements. Existing users, including 377 million users in China alone, can continue to use the service normally.

Reuters/Florence Low

Didi collects a huge amount of navigation data – Beijing gets way too much

The authority sees “serious” data law violations

The company is threatened with financial losses due to restrictions imposed by Chinese digital censorship. The board assumes that banning the app for new user groups could reduce sales in China, Didi announced on Monday. In the meantime, analysts are not afraid of a noticeable drop in profits, as the current user base in China is large. Didi reported sales of about 42.2 billion yuan (5.5 billion euros) in the first quarter, of which more than 90 percent came from the China mobility division. The company is also active in 15 other countries.

The Beijing authorities justified the deletion of the application in stores with “serious violations” in the collection and use of personal data. The company must solve the problems. There are also concerns about national security.

Didi announced that it has already stopped registering new users on July 3 and is now working on patching the app in accordance with regulatory requirements. Uber’s competitor announced that it will cooperate fully. Before the IPO, no one knew CAC would launch an investigation or order app downloads to be suspended.

IPOs ‘could be very dangerous’

The measures come amid widespread regulatory pressure on domestic tech companies focused on anti-competitive behavior and data security that began canceling a $37 billion initial public offering by Alibaba’s Ant Group late last year.

said Martin Chorzempa, Senior Fellow at the Peterson Institute for International Economics.

The order against Didi is one of the CAC’s most notorious actions since it was founded in 2014, and it signals growing skepticism about the data security of US-listed companies.

Party Bulletin: “Super database” is not allowed

“For a government eager to highlight its local heroes, one would think that China would like to address these issues in a timely and special way,” said Zenon Kaprun, head of the Kapronasia think-tank and advisory group. “The fact that this is not happening is a clear indication that China wants to use these companies as warnings to other tech companies.”

The Global Times, a tabloid published by the official People’s Daily of the ruling Chinese Communist Party, wrote on Monday that Didi’s apparent ability to “analyze big data” was putting personal data at risk.

“No Internet giant can be allowed to become a super-database of Chinese personal information that is more detailed than the country owns. This company cannot be allowed to use the data as it wants,” the article said.

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