Chinese authorities are set to hit mobility giant Didi with a $1 billion fine, a move that could end a torrid period for the firm.
Didi has been in the spotlight of the Chinese government after the company raised $4 billion from selling its stocks in New York.
Beijing launched a data security probe into Didi in the days after its New York Stock Exchange (NYSE) listing; claiming that it was “illegally collecting user data”. However, both the country’s regulators and Didi failed to elaborate on what data was illegally being collected.
Listing on the NYSE involves potentially sharing data with US regulators. Didi has around 500 million annual users.
The potential for US authorities to probe such a large dataset appears to have caused some concern in China. While it probed the company, Chinese authorities forced local app stores to delist Didi’s app.
Unlike many Western countries, China is not a nation historically associated with strong data protection practices. However, Beijing has increased its probing of data practices in recent years.
In April 2020, China’s relatively new Cybersecurity Review Office – housed within the country’s internet regulator, the Cyberspace Administration of China – had its roles defined as part of the ‘Measures for Cybersecurity Review’. Further cybersecurity measures came into effect in February 2022.
The new Cybersecurity Review Office appears to have made an example of Didi to show that it will take action against any company that fails to assure the regulator that data will be protected.
However, in a memo of an “expert meeting” shared among Didi’s investors, an executive for the firm said the company stores all its China data and that it’s “absolutely not possible” that it passed data to US authorities.
It’s hard not to wonder if the real intention of the clampdown is to make Chinese firms think twice before listing in the US. TikTok owner ByteDance has already put an indefinite hold on its plans for a US listing.
Didi, for its part, will be hoping that payment of the $1 billion fine will finally put the situation behind it.
(Image Credit: Didi Global)
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