Didi app suspended in China over data protection

BEIJING (REUTERS) - China’s cyberspace administration said on Sunday (July 4) that it had ordered smartphone app stores to stop selling the ride-hailing firm Didi Global’s app after finding that Didi had illegally collected users’ personal data.

The Cyberspace Administration of China (CAC) said on its social media feed that it had ordered Didi to make changes to comply with Chinese data protection rules. It did not specify the nature of Didi’s violation. 

Didi responded by saying it had stopped registering new users and would remove its app from app stores. It said it would make changes to comply with rules and protect users’ rights.

Didi debuted on the New York Stock Exchange on Wednesday following a US$4.4 billion (S$5.9 billion) initial public offering (IPO). Didi was valued at US$67.5 billion in the IPO, well down from the US$100 billion it had hoped for, which potential investors had resisted.

Redex Research director Kirk Boodry, who publishes on Smartkarma, said CAC’s move appeared aggressive, but that Didi had anyway been banned from adding new users during a review of its cybersecurity.

“It indicates the process could take a while, but they have a large installed base so near-term impact (is) likely muted for now," he said. 

Didi’s app was still working in China for people who have downloaded it already. It offers over 20 million rides in China every day, on average.

A notice on the app shows it updated user information and data privacy policy on June 29, one day ahead of its New York IPO. The policy will be effective on July 7, according to the notice. 

Didi did not immediately respond to a request for explanation on why it updated the policy that day.

The CAC last Friday announced an investigation into Didi to protect “national security and the public interest”, prompting a 5.3 per cent fall in its share price to US$15.53. The stock was sold at US$14 in the IPO – the top of the flagged range.

Chinese regulators have tightened data collection rules for major tech firms in recent years. 

Didi, which offers services in China and more than 15 other markets, gathers vast amounts of real-time mobility data every day. It uses some of the data for autonomous driving technologies and traffic analysis.

Founded by Mr Will Cheng in 2012, the company has already been subject to regulatory probes in China over safety and its operating licence.

Didi had set out relevant Chinese regulations in its IPO prospectus and said: “We follow strict procedures in collecting, transmitting, storing and using user data pursuant to our data security and privacy policies.”