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

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

by Mary Sewell

In less than a week, China’s leading ride-hailing platform, Didi, has gone from investor darling with a megabucks Wall Street debut to the most prominent new target in Beijing’s fast-moving efforts to tame the country’s internet industry. The latest front in the regulatory blitz is privacy and cybersecurity. Chinese consumers have grown increasingly privacy-conscious in recent years, and the authorities have taken a particular interest in safeguarding platforms.

Like Didi’s, which handles sensitive information such as locations, Beijing’s moves against Didi — halting new user sign-ups, then ordering it off app stores in two days — stand out both for their speed and for coming soon after the company’s initial public offering last week. They send a stark message to Chinese businesses about the government’s authority over them, even if they operate globally and their stock trades overseas. And they are a reminder to international investors in Chinese companies about the regulatory curveballs that can sometimes come hurtling their way.

Wasting no time at all, China’s internet regulator announced on Monday morning that user registrations on three more Chinese platforms were being suspended — also, as with Didi, to allow officials to conduct cybersecurity reviews. The two companies behind those platforms have listed shares recently in the United States. Concerns about data protection have been growing on both sides of the Pacific as relations between China and the United States have deteriorated in recent years. As the two powers vie for economic, military, and technological advantages, they have each sought to ensure that their companies’ digital information does not slip into the other’s hands, even when business takes place across borders.

Beijing has not clarified what specific security and privacy problems — either past or potential — led regulators to move against Didi. But under 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.

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