China to hit mobility giant Didi with a $1B fine

Chinese authorities are set to hit mobility giant Didi with a $1 billion fine, a move that could end a torrid period for the firm.

China fines mobility giant Didi $1 billion
Chinese authorities are set to fine mobility giant Didi $1 billion, a move that could end a turbulent period for the company.
Beijing launched an investigation into Didi’s data security days after it was listed on the New York Stock Exchange (NYSE); claims it was “illegally collected from user data”. But the country’s regulators and Didi failed to detail what data was illegally collected.

A listing on the NYSE includes possible data sharing with US regulators. Didi has almost 500 million annual users. The ability of US authorities to review such a large set of data appears to be raising some concerns in China. Chinese authorities have forced local app stores to delete Didi’s app while the company investigates.

Unlike many Western countries, China is not a country historically associated with strong data protection practices. However, Beijing has tightened controls on its data practices in recent years.

As of April 2020, China’s relatively new Cybersecurity Review Office, located within the country’s internet regulator, the Cyberspace Administration of China, has defined roles as part of the “Methods for Cybersecurity Review”. Further cybersecurity measures will begin in February 2022.

The new cybersecurity watchdog appears to be setting an example for Didi to show that it will take action against any company that fails to assure the regulator that data is protected.

However, in a memo from an “expert meeting” shared with Didi investors, a company executive said the company stores all data in China and that it can “never” be transferred. This is the data of the US authorities.

It’s hard not to wonder if the real purpose of the crackdown is to make Chinese companies think twice before registering in the US. TikTok’s owner, ByteDance, has indefinitely suspended its plans to enter the US.