February 2, 2023

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Didi Receives China Reboot Approval After 18-Month Safety Investigation • TechCrunch

Eighteen months after its app was suspended in China, ride-hailing giant Didi made a comeback on Monday. The move comes as China has shown signs over the past three years that it would relax its sweeping regulatory crackdown on the internet sector.

In July 2021, Chinese authorities ordered the country’s app stores to remove Didi, citing reasons that the platform was “illegally collecting user data”. Earlier that month, Didi went public in New York. It was a short-lived celebration for the company, which raised a whopping $4 billion from its first sale, as the event quickly emerged as the root of its clash with Beijing.

According to multiple reports and an investor memo viewed by TechCrunch at the time, Didi failed to reassure the government that its cross-border data practices are secure before it went public in the U.S., where it is said the data of hundreds of millions of Chinese citizens could be subject to an audit be subjected to. The misstep prompted a year-and-a-half security investigation by China’s top cyberspace watchdog.

It seems Didi’s time of repentance and rectification is over, as the company posted on Weibo Monday afternoon:

“Our company has taken serious steps to cooperate with the country’s cybersecurity review, resolve the security issues found in the review, and make comprehensive corrections.”

With the approval of the Cybersecurity Review Office, a relatively new body that addresses data security concerns from internet companies, Didi was allowed to resume new user registrations for Didi Chuxing, its main ride-hailing platform, effective immediately.

Aside from a data overhaul, Didi was also reportedly fined $1 billion for breaking the rules. The delisting from the US was completed in May last year and work is underway to be listed again on the Hong Kong Stock Exchange, an increasingly preferred choice for Chinese tech companies coping with rising US-China tensions.

Before the user registration relaunch, Didi users could still use the app if they already had it on their phones. But the app was besieged by hungry rivals. Alibaba-owned mapping service AutoNavi, for example, has been gaining ground as an aggregator of third-party ride-hailing services, including Didi.

The era of unbridled growth in the ride hailing sector is long gone. China has tightened regulatory oversight of the novel business in recent years, aligning it more with the traditional state-owned taxi industry.

After the regulatory overhaul, Didi will certainly be much more cautious about the government’s red line.

“Going forward, the company will adopt effective methods to ensure the security of platform infrastructure and big data to ensure national cybersecurity,” the Weibo post said.