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China orders Didi to be removed from app stores over data privacy concerns

Didi was among 34 tech companies being investigated by Chinese antitrust watchdogs

China has forced app stores operating in the country to remove ride-hailing giant Didi Chuxing’s app on the grounds of illegal collection of personal data.

The move does not affect people who have already downloaded the app, but could impact Didi’s $4.4bn initial public offering in New York.

Didi is the market leader in China after buying out Uber’s China business in 2017 and investing $1bn in Uber globally, granting it a ‘minority interest’ in the company. It has also expanded into Europe and Africa after it made an undisclosed amount of investment in Taxify, an Estonian-based ride-sharing operator.

In China, it provides ride-hailing services, on-demand delivery services and automobile services, including sales, fleet operation, electric vehicle charging and co-development of vehicles with automakers.

“We sincerely thank the responsible departments for guiding Didi to inspect the risks. We pledge to conscientiously rectify the issues,” Didi said.

Why is this happening to Didi?

  • Didi was among 34 tech companies being investigated by Chinese antitrust watchdogs in April, which have conducted on-site inspections of Didi.

  • China’s legislature passed a data security law in June 2020 laying out rules for how customer data is used, collected, developed and protected, and providing a legal basis for the country to request data from tech companies.

  • China is now one of the countries with the most regulated data control after passing a cybersecurity law in 2017. It has since introduced laws to regulate data collection practices and the use of personal data, and limit anti-competitive practices.

  • In March, Alibaba was told to give up its media properties over fears that the e-commerce giant has become too influential.

  • The media properties that Alibaba owns and has stakes in include The South China Morning Post newspaper, social media platform Weibo, video-streaming platform Youku Tudou, movie production house Alibaba Pictures and Focus Media, China’s largest offline advertising network.

  • China was also angered with Alibaba founder Jack Ma’s comments about Chinese president Xi Jinping’s efforts to regulate Ant Group, Alibaba’s financial arm, as it offers consumer-focused financial services. The company’s finance platform, Alipay, has reams of data on user spending, borrowing and lending habits and histories.

  • A month later, China fined Alibaba $2.8bn for penalizing merchants who sell their products on Alibaba’s platform and also on other e-commerce platforms in the country.

  • Alibaba will now be required to revamp its platform operations and submit a ‘self-examination compliance report’ by 2024.

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