China’s Crackdown on Didi Is a Reminder That Beijing Is in Charge

In lower than a week, China’s main ride-hailing platform, Didi, has gone from investor darling with a megabucks Wall Street debut to the most important new goal in Beijing’s fast-moving efforts to tame the nation’s web business.

The newest entrance in the regulatory blitz is privateness and cybersecurity. Chinese shoppers have grown more and more privateness aware in latest years, and the authorities have taken specific curiosity in safeguarding platforms, like Didi’s, that deal with delicate info reminiscent of areas.

But Beijing’s strikes towards Didi — halting new consumer sign-ups, then ordering it off app shops in a span of two days — stand out each for his or her pace and for coming so quickly after the corporate’s preliminary public providing final week. They ship a stark message to Chinese companies concerning the authorities’s authority over them, even when they function globally and their inventory trades abroad. And they’re a reminder to worldwide buyers in Chinese firms concerning the regulatory curveballs that may typically come hurtling their means.

Wasting no time in any respect, China’s web regulator introduced on Monday morning that consumer registrations on three extra Chinese platforms have been being suspended — additionally, as with Didi, to permit officers to conduct cybersecurity opinions. The two firms behind these platforms have listed shares not too long ago in the United States.

Concerns about knowledge safety have been rising on each side of the Pacific as relations between China and the United States have deteriorated in latest years. As the 2 powers vie for financial, navy and technological benefits, they’ve every sought to make sure that their firms’ digital info doesn’t slip into the opposite’s palms, even when enterprise takes place throughout borders.

Beijing has not made clear what particular safety and privateness issues — both previous or potential — led regulators to maneuver towards Didi. But underneath Chinese law, cybersecurity reviews are a national security issue, something officials did not fail to highlight in announcing their review of Didi on Friday.

The tensions with the United States likely motivated Chinese officials to pay extra attention to Didi and its New York I.P.O., said Angela Zhang, director of the Center for Chinese Law at the University of Hong Kong. In this time of antagonism, selling shares in the United States inevitably caused worries in Beijing about how well Didi’s troves of Chinese data were being protected, Professor Zhang said.

Another factor, she said: surging nationalism among Chinese internet users. This past weekend, after Chinese regulators halted new user registrations, Didi tried to dispel rumors that it handed data over to the United States as a consequence of its listing.

“That also in part exerts pressure on the regulators to act, and also gives them legitimacy to act,” Professor Zhang said.

Didi filed preliminary I.P.O. paperwork with the Securities and Exchange Commission on June 10. The rest of the listing process was completed at lightning speed, and on Wednesday, Didi’s shares began trading on the New York Stock Exchange.

But two days later, China’s internet regulator announced that Didi would not be allowed to register new users while the authorities conducted a cybersecurity review. The government’s rules for such reviews, which were enacted last year, are part of China’s framework for controlling security risks associated with the products and services that major tech companies use.

The next day, a Didi executive wrote on the social platform Weibo that he had seen rumors saying that because the company had gone public in New York, it had to turn over user data to the United States. The executive said that Didi stored all its Chinese data on servers in China, and that the company reserved the right to sue anyone who said otherwise.

The message was reposted on Didi’s official Weibo account 16 minutes later, with the comment: “We hope everybody avoids spreading and believing rumors!”

On Sunday evening, the internet regulator put out another terse statement, this one ordering Didi’s app off mobile stores in China for unspecified problems related to the collection of user data.

This is not the first time that an app under pressure from the Chinese authorities has been removed from mobile stores, though in many such cases, the apps have later been reinstated.

In 2018, two popular video platforms, Kuaishou and Huoshan, vanished from app stores after a state broadcaster accused them of glorifying underage pregnancy. Huoshan is run by TikTok’s parent company, ByteDance.

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