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 offered delicate person 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 private 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 have been aimed toward persuading Didi to cancel its US itemizing and transfer its IPO to Hong Kong, and that its ban, and the fees towards it, have been punishment for defying Beijing’s needs.
Different tech firms definitely took the trace, and several other—together with content-sharing app Little Pink Ebook, 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 Massive Tech firms in China. In November 2020, the IPO of the large fintech firm Ant Group was suspended after its founder, Jack Ma, criticized China’s monetary regulators. A minimum of a dozen firms, together with the tech conglomerates Tencent and Alibaba, search large Baidu, and meals supply firm Meituan have been investigated and fined beneath 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 discovered to not fiddle with regulators’ calls for, as a result of they’ll take drastic motion if needed,” 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 informed explicitly to not go forward with a list.”
After Didi was minimize from app shops, passengers and drivers who had beforehand registered might nonetheless use the service as regular, but it surely was unimaginable 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 proportion of customers who often booked rides fell on the similar 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, informed Startup 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 firms noticed Didi’s suspension from app shops as an awesome alternative to achieve market share, and started elevating 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 obtained 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.