China Removed Didi From App Stores, Accused The Company Of Violating Security Rules

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One of the biggest IPOs of the year took place last month in New York. It was a Chinese ride-hailing company called DiDi Global, and it raised $4.4 billion. Just days later, Chinese regulators took some extraordinary steps. They ordered DiDi's suite of apps removed from app stores in China and said the company was being investigated for possibly violating the country's data protection rules. NPR's China affairs correspondent John Ruwitch looks at what it all means.

JOHN RUWITCH, BYLINE: DiDi has been called the Uber of China, but it's bigger - a lot bigger. It has nearly 600 million users and books tens of millions of rides each month. In some cities, you can barely get a cab without it. And that helps explain why China's ruling Communist Party took a swing at it, says Samm Sacks, a senior fellow at Yale Law School's Paul Tsai China Center.

SAMM SACKS: What I think is probably going on is that Chinese regulators are freaked out about Chinese companies disclosing sensitive data in the process of listing in the United States.

RUWITCH: China has long been uncomfortable with financial disclosure requirements in the U.S., and companies like DiDi add an extra layer of discomfort for the ruling Communist Party. The company keeps track of who's taking rides and who's driving. It knows where people are going and also their phone and bank account numbers. It can predict when you need a ride and for consumer safety, even record audio inside the car during the ride.

SACKS: That's a treasure trove from a foreign intelligence perspective. You're talking about potentially being able to target individuals and know where they go, triangulating that against a whole host of other kinds of information on the platform.

RUWITCH: Tellingly, she says, the Chinese authorities also announced investigations into some other U.S.-listed Chinese tech companies involved in transport.

SACKS: The Chinese government sees mobility data and traffic data as vital to national security.

RUWITCH: But it goes beyond that. In recent months in China, there have been antitrust investigations, data protection probes and steps by regulators to clamp down on tech firms wading into finance and banking. Gabriel Wildau is a political risk analyst at Teneo.

GABRIEL WILDAU: The party leadership has adopted a very holistic and expansive conception of national security. The national security encompasses data security. It encompasses financial security and financial stability. It even encompasses consumer protection.

RUWITCH: And more - and it's all coming to a head. Authorities have been busy creating a raft of new tech-related regulations in recent months. So why did they come down on DiDi after its IPO? Kendra Schaefer is head of tech policy research at the consultancy Trivium China in Beijing.

KENDRA SCHAEFER: It's a complicated environment, and it's creating a ton of uncertainty for companies over here.

RUWITCH: She suspects DiDi was getting mixed messages. China's internet regulator had reportedly expressed misgivings and may have even suggested delaying the listing. But apparently, nobody explicitly said, stop the IPO, including the securities regulator, which oversees stock issues. DiDi didn't respond to a request for comment. In the past week, China has enacted much tighter approval rules for companies planning overseas IPOs.

SCHAEFER: And so what that really brought to light for the Chinese government is, hey, these companies need to be listen - you know, they need to be compliant locally - completely with regulations before they run off abroad and, you know, are compliant with foreign regulations in terms of listing.

RUWITCH: DiDi's listing now looks a lot less attractive than it did when it IPOed (ph). Its share prices tumbled, and investors have already launched class action lawsuits against the company.

John Ruwitch, NPR News. Transcript provided by NPR, Copyright NPR.