China’s cybersecurity regulator has fined ride-share company Didi 8 billion yuan ($1.7 billion), ending a probe that forced it to delist from the New York Stock Exchange after a year in operation, sending foreign investors a warning about China’s tech sector.
- Didi raised alarms going ahead with a US stock exchange listing, despite being urged to wait while a cybersecurity review was conducted
- That investigation found Didi illegally collected millions of pieces of user information
- The ride-share company’s fine is the largest regulatory penalty imposed on a Chinese technology company
Didi ran afoul of the Cyberspace Administration of China (CAC) when it pressed ahead with its US stock exchange listing, despite being urged to wait while a cybersecurity review of its data practices was conducted.
The CAC said Didi violated three major laws concerning cybersecurity, data security and personal information protection.
China revised and expanded its regime last year in an effort to regulate its cyberspace and force companies to improve how they manage data.
The investigation found Didi illegally collected millions of pieces of user information over a seven-year period, from June 2015 onwards, and performed data-processing activities that seriously affected national security.
After fining the company, the CAC said founder and chief executive Cheng Wei and president Jean Liu were responsible for the violations and imposed penalties of 1 million yuan ($215,000) each.
“Didi’s violations of laws and regulations are serious … and should be severely punished,” the CAC said.
In a statement to Chinese social media site Weibo — which was backed by Uber and Japan’s Softbank — Didi said it accepted the CAC’s decision and would conduct comprehensive self-examination and rectification.
Crackdown on antitrust violations
The action against Didi was part of an unprecedented crackdown on violations of antitrust and data security rules, targeting some of China’s best-known corporate names.
In recent months, authorities have changed their tone towards the crackdown as they seek to boost the country’s COVID-ravaged economy.
The shift has raised hope among companies and investors that the worst is over, but jitters remain.
Didi previously aimed to list in Hong Kong by June but put plans on hold after failing to win approval from Chinese regulators.
The ride share’s fine is the largest regulatory penalty imposed on a Chinese technology company behind that imposed on Alibaba Group Holding Ltd and Meituan, which were fined 18 billion yuan ($3.8 billion) and $3.4 billion yuan ($739 billion), respectively, last year by the antitrust regulator.