Why China Ban DiDi From App Stores Just Days After Massive U.S. IPO

Days after DiDi Global pulled off one of the biggest U.S. initial public offerings this decade, a Chinese cybersecurity regulator has ordered its removal from China’s smartphone app stores, alleging the ride-hailing company illegally collected and used customers’ personal information, according to multiple reports.

The Cyberspace Administration of China on Sunday banned Didi from app stores after saying it posed a cybersecurity risk for customers.

China bans Didi, its biggest ride-hailing service, from app stores

“Didi Chuxing app is found to have severely violated the laws by illegally collecting and using personal information,” the regulator said. It called on Didi to fix the issue with its app to comply with the country’s laws and to ensure its customers’ safety.

Why China Ban DiDi From App Stores Just Days After Massive U.S. IPO?

The company, which has 377 million active users in China alone, said in a statement it is complying with China’s demands, pulling the app from stores as it works to make changes to its app to satisfy regulators. Didi said customers and drivers who have already downloaded the app will be able to continue to use it.

“We sincerely thank the … department for its instruction in troubleshooting Didi’s risks,” the company said. “We will rectify and improve risk avoidance and … provide safe and convenient services to our users.”

The ban comes less than a week after Didi went public on the New York Stock Exchange in the biggest US share offering by a Chinese company since Alibaba debuted in 2014.

Just two days later, on Friday, China suspended the registration of new users on the app. The suspension was put in place “to prevent the expansion of risk” during a “cybersecurity review” into the company, according to a statement from the country’s cyberspace administration. The company’s stock price tumbled Friday.

Sunday’s ban represents an escalation of China’s action against Didi, but it’s part of a larger crackdown on Big Tech companies in China.

In March, Chinese President Xi Jinping stressed the need to regulate “platform” companies, businesses that offer online services for customers, in the country. Several tech companies in the past few months have faced investigations for alleged monopolistic behavior or breaches of customer rights leading to record fines and massive overhauls.

Several tech companies in the past few months have faced investigations for alleged monopolistic behavior or breaches of customer rights leading to record fines and massive overhauls. Chinese President Xi Jinping has endorsed the probes, setting regulatory crackdowns as one of the country’s top priorities in 2021, and he has continued to call on regulators to scrutinize tech companies.

In April, Alibaba, the online shopping giant co-founded by Jack Ma, was fined a record $2.8 billion after antitrust regulators concluded the company had behaved like a monopoly. Days after the fine was issued, Ant Group, another part of Jack Ma’s business empire, was ordered to to overhaul its operations and become a financial holding company supervised by the central bank.

Following these crackdowns, China’s State Administration for Market Regulation gathered 34 companies and issued a warning to stop any anti-competitive behavior and ordered internal inspections. Didi was among the summoned companies.

— CNN Business’ Yong Xiong, Shawn Deng and Moira Ritter contributed to this report

Two days after announcing a cybersecurity review of DiDi, the Cyberspace Administration of China ordered app stores to remove DiDi from their platforms after finding the company “severely violat[ed] regulations around the collection of personal data,” though further specifics were provided.