An escalating crackdown removes DiDi from app stores
U.S. listed Chinese tech firms took a hit as the Cyberspace Administration of China (CAC) investigated the companies and took their app off the stores. Ride-sharing giant DiDi Global Inc said their app has been taken down due to the cyberspace investigation and data sharing consequences. Though the company warmly greeted the issue, it could potentially let the company face off with loss.
DiDi recently made its debut in the New York Stock Exchange and just within two weeks, CAC took the app down. Alongside that, regulatory investigation caused a sudden standstill in two days. As the company was not aware that just before the initial public offering (IPO) there would be a cybersecurity investigation. Otherwise, they would’ve tackled the matter and deploy paperwork accordingly. The app takedown by Hong Kong Chinese regulators in the country is the second blow to the company.
China’s rundown on Big Tech
China’s internet watchdog CAC claimed serious issues like the illegal collection of personal data. Currently, most of the world cares for personal or customer data as an act of protection. According to the regulatory authorities, not following that can haul any companies’ action and even shut down business until they fix the issue. A giant ride-sharing company like DiDi is no exception and must fall under consequences.
Regulators also invested in popular recruiting company Zhipin for data privacy. Alongside Yunmanman and Hucochebang. They are truck-hailing companies. Friday was another surprise for Didi. Authorities picked a ban on new users to sign up for the service until the “cybersecurity review” is complete. According to DiDi, existing users will have no issue using their service. As the app is down and sign-up is suspended, the company may fall under losses. DiDi recently launched into the Wall Street market as a publicly traded company, the current issue dropped the company share by 5 per cent. It is unlikely that DiDi will face major losses as the company is already too vast.
New user registration is required to carry on with the revenue flow and data inquiry, but to filter them per rules and regulations seems quite a challenge. Even Full Truck alliance is suspended from adding new users to their database. Experts say that the temporary suspensions in China is not to warn other tech companies but to investigate ones that are violating regulations.
DiDi collects mobility data for research and business expansion. It helps to improve their statics and workflow. Which as a result creates an effect for service improvement? But some data is personal like where a user goes regularly or other personalised information. If breached, they’ll lose security both virtually and in the real world. Which is a big concern. We’ve seen major breaches that leaked customer information similar to the SolarWinds hack.
Opinion’s piece together when government ordered that companies can’t hold more people data than the country. Internet giants tend to do so and database becomes too vast to manage. So small leakage may go unnoticed and it may be used against them. And so, no companies are allowed to use data however they want.
The company raised more than $4 billion in market share within two days and capped $100 billion. Which is a large entry into the market. So, the sweeping enforcement kicked in after its debut. User information can be helpful to market and promote other products.
According to the Chinese newspaper People’s Daily, DiDi’s “big data analysis” can pose a risk for users. Several other companies faced trials from investigators and will be punished accordingly for activities. Some of the incidents include fraudulent share issuance, market manipulation and embezzlement. So, if overseas markets carry on with prominent fraud, there will be serious actions.
The state-run economy of China is onto tech for abusing antitrust systems and practising risky behaviour towards their clients. Full truck and DiDi shares fell unexpectedly and this will also impact the tax margin of the company. Last year DiDi saw 377 million active users in China. The company has business in Brazil, Japan, Australia, South Africa and 16 other countries in total. As Beijing is turning up the heat on internet companies, rivals are gaining some advantage and getting a bit extra profit in the meantime.