Chinese regulator orders app stores to remove Didi, shows resolve to enhance data protection
Move shows resolve to enhance data security
Published: Jul 04, 2021 08:02 PM Updated: Jul 05, 2021 10:27 AM
The headquarters of DiDi in Beijing Photo:VCG

The headquarters of DiDi in Beijing Photo:VCG

China's cyberspace regulator said on Sunday that it has ordered app stores to remove the nation's most widely used ride-hailing app Didi Chuxing, due to confirmed reports of "serious violations of law and regulation" in the collection and use of personal information. 

Coming after the company was put under a review for cybersecurity on Friday - just two days after its massive IPO in the US, the latest order further underscored Chinese regulators' resolve to crack down on illegal activities on online platforms and enhance the protection of data security, analysts said.

The Cyberspace Administration of China (CAC) also told Didi to rectify problems in strict accordance with the law and relevant national standards to ensure the security of users' personal information, the CAC said in an announcement on Sunday.

On Friday, China's cybersecurity review office said that it has launched a review into Didi. During the review period, new user registration would be suspended "to prevent the expansion of risks," it said. 

Didi quickly responded to the Sunday announcement, saying it would strictly comply with the requirements and make improvements for a secured service. 

Didi halted new user registrations on Saturday, and the app will be taken down for rectification in strict accordance with relevant rules, the company said in a statement on Sunday. 

Users who have downloaded the app can use it without interference. 

The swift regulatory actions came just days after the ride-hailing platform raised $4.4 billion in its IPO on the New York Stock Exchange on Wednesday. 

Its shares ended up 1 percent on the first day before soaring nearly 16 percent on Thursday. 

But after the cybersecurity review announcement, shares plunged as much as nearly 11 percent before finishing down 5.3 percent on Friday.

Investors in Didi's US shares were apparently caught off guard by the review, and the company might be the target of a class action lawsuit.

Hao Junbo, chief lawyer at the HAO Law Firm in Beijing, told the Global Times on Sunday that some of Didi's investors have reached out to his law firm and are considering participating in a class action suit to seek compensation.

The regulatory actions against Didi, coming as China stepped up crackdown on illegal activities on online platforms including anti-monopoly and privacy law violations, showed Chinese regulators determination to strengthen protection for personal information and data, analysts said.

Reckoning the review as a timely move to institute a firewall to ensure data security, which is of vital significance to national security as a whole, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, called for delisting of Didi's newly floated shares.

Ride-hailing firms manage large amounts of data regarding national transport infrastructure, flows of people and vehicles, among other types of information that involve national security, according to Dong.

The rise of "data sovereignty" versus the US government's vigilance against Chinese firms ought to be a wake-up call for national security awareness to be given priority when it comes to fundraising plans in areas that might pose threats to China's national security, Dong told the Global Times on Sunday.

Didi's global annual active users for the 12 months ended on March 31 stood at 493 million, according to the company.