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Didi went public on June 30, 2021, valued at $68 billion. Two days later, on the night of July 2, the Our on-line world Administration of China, the nation’s web regulator, introduced that it was reviewing Didi’s cybersecurity. On Chinese language social media, rumors unfold alleging that Didi had bought delicate consumer info and site visitors knowledge to the US, making a nationwide safety threat. Didi’s administration denied the accusations.
On July 4, the regulator made an announcement claiming Didi had illegally collected and used riders’ private knowledge, and ordered app shops to take away the app. A yr later, the Our on-line world Administration determined that the corporate had violated three legal guidelines governing community safety, knowledge safety, and the safety of non-public info—all of which had come into impact solely after the ban was introduced.
On the time, some analysts thought the threats over knowledge safety had been aimed toward persuading Didi to cancel its US itemizing and transfer its IPO to Hong Kong, and that its ban, and the costs towards it, had been punishment for defying Beijing’s needs.
Different tech corporations definitely took the trace, and a number of other—together with content-sharing app Little Crimson E book, podcast platform Himalaya, and cargo service platform Huolala—shelved their plans to go public within the US.
The strain on Didi was solely a part of a a lot wider crackdown on Huge Tech corporations in China. In November 2020, the IPO of the huge fintech firm Ant Group was suspended after its founder, Jack Ma, criticized China’s monetary regulators. At the very least a dozen corporations, together with the tech conglomerates Tencent and Alibaba, search large Baidu, and food delivery company Meituan had been investigated and fined underneath anti-monopoly guidelines. In mid-2021, an efficient ban on after-school tutoring wiped billions of {dollars} off the worth of China’s edtech sector.
“The tech business has realized to not fiddle with regulators’ calls for, as a result of they may take drastic motion if vital,” says Rui Ma, a China tech analyst and founding father of Tech Buzz China. “Particularly within the case of Didi, the place it was rumored that the corporate had been advised explicitly to not go forward with a list.”
After Didi was minimize from app shops, passengers and drivers who had beforehand registered may nonetheless use the service as regular, nevertheless it was inconceivable to create a brand new account. It felt like a harsh punishment, however got here at a degree when progress had already stalled within the ride-hailing business.
Authorities statistics present that the variety of ride-sharing service customers peaked in December 2018, at 389 million. Over the subsequent two years, the quantity declined to 365 million. The share of customers who frequently booked rides fell on the identical time, largely as a result of Covid-19 pandemic and strict lockdowns throughout most of China.
Jeff Li, a tech analyst and former director at consultancy Accenture China, advised WIRED that by the point the Didi Chuxing app had been faraway from app shops, many of the nation’s potential ride-hailing prospects already had an account.
Second-tier ride-hailing corporations noticed Didi’s suspension from app shops as an amazing alternative to realize market share, and began raising funds to spend on advertising and promotions for drivers and prospects. Meituan launched a brand new ride-sharing app in July 2021, and inside two months had rolled it out to greater than 200 cities. In September 2021, the B2C ride-sharing platform Caocao Journey introduced the completion of a RMB3.8 billion ($560 million) Sequence B. The next month, its competitor T3 introduced it had acquired a RMB7.7 billion ($1.1 billion) Sequence A. The brand new apps used the money to broaden into new cities and supply incentives to draw drivers.
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