July 26, 2021

Didi, the Chinese Uber, in Beijing’s sights

The Chinese regulator continues to show its fangs in the face of its tech giants: the Chinese Cyberspace Administration announced on Friday, July 2, that it had launched an investigation into the Chinese leader in taxi and car ordering with driver, Didi Chuxing , and this just two days after he raised 4.4 billion dollars (3.71 billion euros) on Wall Street, based on a valuation of 67 billion dollars.

On Sunday July 4, the Chinese Internet regulator stepped up the pressure by suspending Didi from application stores, after having forced the company to stop new registrations. Measures that will last the time of the investigation. And Monday, two other Chinese digital companies, listed in the United States, are in turn targeted by an investigation into their data practices.

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« After research and verifications, it was established that the Didi Chuxing application is in serious breach of the regulations on the collection and use of personal data. », Explained the regulator, adding that he asked the company to “Correct existing problems” and of “Effectively protect the personal information of users”. We do not yet know the nature of the alleged offenses, as well as the duration of the investigation. According to the rules of the administration, it must provide an initial result within forty-five days, except in particularly complex cases. In the meantime, the app continues to work for old users.

Vast regulation campaign

After allowing the development of tech giants by showing, for years, a great legislative tolerance towards them, China has been carrying out, since autumn 2020, a vast campaign to regulate the sector.

Ant Group, the financial subsidiary of Alibaba, was the first victim, with the cancellation at the last moment of its IPO, which could have been the largest in history. This time around, the regulator has let the go-to-market take place, but the timing of the announcement of this investigation, just two days after Didi’s big debut on Wall Street, is not trivial. If some suggest that Didi rushed to raise funds before being targeted by Beijing, the regulator was also able to react to this introduction, the most important for a Chinese company since that of Alibaba in 2014. “Companies that go public abroad and have a dominant position attract more attention from regulators, but this does not seem unique to China”, underlines Bill Russo, specialist in mobility issues in China and founder of the consultancy firm Automobility, in Shanghai.

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