Pointers at Glance
- A mobility giant, Didi was hit with a $1 billion fine by the Chinese authorities.
- The new Cybersecurity Review Office showed an example of Didi to convey that it will take action against any company that fails to assure the regulator that data will be secured.
The authorities of China are set to hit mobility giant Didi with a $1 billion fine. It is a move that could end a torrid period for the company.
Didi raised $4 billion from selling its stocks in New York. For the same reason, it has been in the spotlight of the government of China.
Beijing released a data security probe into Didi in the days after its New York Stock Exchange (NYSE) listing, claiming that it was “illegally collecting user data.” However, the regulators of both the countries and Didi failed to explain what information was illegally being collected.
NYSE listing involves potentially sharing data with US regulators. Didi has nearly 500 million users per year.
It appears to have caused some concern in China due to the potential for US authorities to probe such a large dataset. However, while it probed the company, Chinese authorities compelled local app stores to delist Didi’s app.
China is not a nation historically associated with strong data protection practices, unlike many western countries. However, In recent years, Beijing has increased its probing of data practices
China’s relatively new Cybersecurity Review Office housed within the country’s internet regulator in April 2020, the Cyberspace Administration of China, had its roles defined as part of the ‘Measures for Cybersecurity Review.’ Further cybersecurity measures came into existence in February 2022. It appears to have made an example of Didi to show that it will take action against any company that fails to assure the regulator that data will be secured.
However, an executive for the company said in a memo of an expert meeting that was shared among the investors of Didi that the company stores all its China data, and it is impossible that it transferred data to US authorities.
It’s hard to understand if the actual intention of the clampdown is to make Chinese firms think twice before listing in the United States. For example, TikTok owner ByteDance has already put an indefinite hold on its plans for a US listing.
Didi is hoping that payment of the $1 billion fine will finally put the situation behind it.
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