On Sunday, July 4, the government of China ordered the Chinese private company Didi Global Inc. to remove its app from the application stores, due to some problems related to the way it collects users' personal data. The company – which controls the country's largest chauffeur-driven car service, similar to Uber – had a U.S. subsidiary listed on the stock exchange just last week, and is the latest of China's big tech companies to go under. attention of the China Cyberspace Agency, which closely monitors Internet activities by companies and individual users in general.
The Chinese authorities have not yet provided many other details on the reasons that led to the new severe limitations for Didi, which can still continue to provide its services to around 380 million people already registered in China. In recent days, the Agency had also imposed on the company to suspend new subscriptions to its service, effectively blocking its growth opportunities. The suspension from the application stores is a further obstacle, but according to analysts the situation should not change much compared to what had arisen a few days ago with the ban on new subscriptions.
In the days around the US stock exchange listing, rumors circulated that some of the data of Didi's Chinese users could be stored in the United States in violation of China's data protection rules. Didi's vice president, Li Min, denied this fact and ensured that all data was stored in China, as required by local laws. It is unclear whether the Chinese government's ruling resulted from confusion over this circumstance.
In a short press release released on Sunday, Didi thanked “the competent agency” for having pushed the company to make a new “risk assessment” for user privacy. The company also committed to “conscientiously review” the problem.
For the next 7 July the company had planned a revision of the privacy rules. A notice had been shown through the application to subscribers, but even in this case it is not clear whether the decision of the government agency derived from the changes that the company intended to introduce.
The Chinese government has so far provided very little information, as is often the case in these cases. Didi holds a de facto monopoly in China regarding apps for booking chauffeured cars and, over time, has collected an enormous amount of data on the movements of its members and on the routes followed by the cars. The company says analyzing that data is critical to improving the user experience, providing more accurate information on traffic patterns, and developing new technologies for autonomous driving.
In recent months, the government of China has initiated a review of the activities of the largest private Internet companies, imposing restrictions or calling for changes to some of their policies. He started doing it after having limited himself for years to exercising strict censorship on content, dealing only partially with the economic and growth aspects of companies that now control the data of about a billion people.
In 2017, a first law was passed in the country to regulate the management of data by private companies, leaving the Chinese government ample room to exercise strict control over the flow of information online. In the last year, new laws have also been drawn up to reduce anti-competitive activities and to regulate the way in which users' personal data are stored and used. The government has also reserved the right to request data held by companies.
Last April, competition authorities in China had launched investigations into 34 major technology companies, including Didi. The interest was mainly on the initiatives launched by the company to list its subsidiary in the United States, and on its activities in 16 other countries where the services provided by the company are active.
Also last April, the Chinese government decided a € 3.3 billion fine against Alibaba, a huge e-commerce company, accusing it of having violated certain competition rules in a sector in which it essentially holds a monopoly. Investigations were also launched against Meituan, which runs a large home delivery service, and ByteDance, the company that manages the TikTok social network.
In recent weeks, the Chinese government has also identified hundreds of applications that collect and use users' personal data in ways that do not comply with the new rules. Some of these applications are run by ByteDance, Baidu and Tencent, which are among the largest and most powerful Internet companies in China. In their case, however, the government has not ordered the suspension of the distribution of applications, as long as the data management problems are solved quickly.
