After Alibaba, Chinese govt cracks down on ride-hailing company Didi Chuxing

Didi Vice President Li Min said that Didi Global Inc stores all China user and road data at servers in the country and denied all possibilities that the company passed data to the United States.

The Cyberspace Administration of China launched an investigation into the country’s largest ride-hailing company Didi Chuxing citing issues related to national data security. The investigation was launched two days after Didi Chuxing debuted in the New York Stock Exchange. The news of the investigation knocked off 5% off Beijing-based Didi’s shares on Friday. Didi’s Initial Public Offering (IPO) was the bourse’s second-biggest of the year.

A driver opens the Didi Chuxing ride-hailing app on his smartphone in Beijing. ( AFP)

The Chinese government’s internet watchdog claims that the investigation is aimed at preventing security-related risks. It has also prevented its application from accepting new users until the investigation is over. Didi Chuxing said that they will cooperate with the relevant government authority. It said that apart from taking in new users its operations are continuing normally.

Didi Vice President Li Min said that Didi Global Inc stores all China user and road data at servers in the country and denied all possibilities that the company passed data to the United States. Min also said that it would sue any social media user who claimed that Didi transferred data during its recent IPO process after several such claims were made on Weibo, China’s Twitter-like social media platform.

“Like many overseas-listed Chinese companies, Didi stores all domestic user data at servers in China, it is absolutely not possible to pass data to the United States,” Li said in a post on Weibo, according to news agency Reuters. Didi said that it will conduct a comprehensive examination of cybersecurity risks.

Several experts however believe that the investigation on Didi is a measure to control the country's fast-growing and freewheeling tech sector. The Wall Street Journal in a report said that China increased its crackdown on tech companies citing anti-competitive practices among Chinese internet giants. It also said that the Chinese government called out tech companies citing alleged offences, including inconsistent pricing, user privacy concerns and difficult working conditions.

Earlier in April, the Chinese government slapped a $2.8 billion dollar fine on Alibaba claiming it had abused its dominant market position by engaging in controversial practices.

(with inputs from Reuters, ANI)