Didi went public on June 30, 2021 and is valued at $68 billion. Two days later, on the evening of July 2, the China Cyberspace Administration, the country’s internet regulator, announced that it was reviewing Didi’s cybersecurity. Rumors have circulated on Chinese social media that Didi has sold sensitive user information and traffic data in the US, posing a national security risk. Didi management denied the allegations.
On July 4, the regulator issued an allegation that Didi was illegally collecting and using riders’ personal data and ordered app stores to remove the app. A year later, the Cyberspace Administration decided that the company had violated three laws governing network security, data security, and the protection of personal information – all of which came into force only after the ban was announced.
At the time, some analysts believed that the data security threats were intended to convince Didi to cancel its US listing and move the IPO to Hong Kong, and that her ban and charges against her were punishment for ignoring Beijing’s wishes.
Other tech companies have certainly taken the hint, and some, including content-sharing app Little Red Book, Himalaya podcast platform and Huolala trucking platform, have shelved their plans to go public in the US.
The pressure on Didi was just part of a much larger crackdown on big tech companies in China. In November 2020, the IPO of the large fintech company Ant Group took place. was suspended after founder Jack Ma criticized China’s financial regulators. At least a dozen companies, including technology conglomerates tencent And Alibabasearch giant BaiduAnd meituan food delivery company were investigated and fined under antitrust rules. In mid-2021, an effective ban on out-of-school education wiped out billions of dollars in the value of China’s edtech sector.
“The tech industry has learned not to mess with regulators because they will take drastic action if necessary,” says Rui Ma, Chinese tech analyst and founder of Tech Buzz China. “Especially in the case of Didi, where the company was rumored to have been explicitly told not to list.”
After Didi was excluded from the app stores, previously registered passengers and drivers could use the service as usual, but it was not possible to create a new account. It felt like a harsh punishment, but it came at a time when the growth of the taxi industry had already stalled.
Government statistics show that the number of rideshare users peaked in December 2018 at 389 million. Over the next two years, the number dropped to 365 million. The percentage of users who regularly booked rides dropped at the same time, mainly due to the Covid-19 pandemic and strict restrictions across much of China.
Jeff Lee, a technical analyst and former director of consulting firm Accenture China, told WIRED that by the time the Didi Chuxing app was removed from app stores, most potential taxi customers in the country already had an account.
Tier 2 taxi companies saw Didi’s removal from app stores as a great opportunity to gain market share. started fundraising spend on marketing and promotions for drivers and customers. Meituan launched the new sharing app in July 2021 and rolled it out to more than 200 cities within two months. In September 2021, B2C sharing platform Caocao Travel announced the completion of Series B worth 3.8 billion yuan ($560 million). The following month, its competitor T3 announced that it had received a 7.7 billion yuan ($1.1 billion) Series A. , New applications used cash to expand to new cities and offer incentives to attract drivers.