Apple-backed ride-hailing app ‘Didi’ is removed from App Store in China after U.S IPO

After an investigation, the Cyberspace Administration of China (CAC) has ordered the removal of the Didi app from Apple’s App Store in China.

Didi is a Chinese ride-hailing app and in 2016, Apple earned a seat on the company’s board by making a $1 billion investment. Apple CEO Tim Cook said that the investment had strategic significance for the company for it “a chance to learn more about certain segments of the China market.” And citing privacy concerns, the CAC ordered that app to be taken down from Apple’s digital marketplace, only a week after it enlisted in the New York Stock Exchange.

Didi removal from Apple’s App Store in China over users’ data security issues

The CAC began a probe into Didi operations over data security issues after it went public and without any explanation ordered its online shutdown. Bloomberg reports:

Shares of Didi Global Inc. tumbled in New York on Friday after China said it’s starting a cybersecurity review of the company, just two days after it pulled off one of the biggest U.S. stock market debuts of the past decade. The Cyberspace Administration of China announced the app ban Sunday, citing serious violations on Didi Global’s collection and usage of personal information, without elaborating.

“Both the Ant IPO cancellation and this action on Didi show that IPOs can be very dangerous in China, shedding light on one’s scale and operations that invite regulatory scrutiny,” said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics.

Reuter detailed that CAC found Didi illegally collected users data and opinion is that no tech giant should be allowed to collect users’ data.

The CAC said it had ordered app stores to stop offering Didi’s app after finding that the company had illegally collected users’ personal data.

No internet giant can be allowed to become a super database of Chinese people’s personal information that contains more details than the country, and these companies cannot be allowed to use the data however they want,” it said in an opinion piece.

Denying the allegation, a senior Didi executive said that all of users data in China is in the country and is not shared with United States. CAC allegation sound very similar to former President Trump’s allegation and ban on TikTok and WeChat.

A senior Didi executive said on Saturday that the company stores all China user and roads data at servers in the country and it is “absolutely not possible” that it passed data to the United States

Ban is on new users, existing users will be able to use the app as usual. The company says that it will rectify the government’s concerns in an upcoming update. Although the company said that in a statement “its app be removed from app stores in China could hurt revenue”, analyst estimate that the impact on Didi’s revenue is likely to be trivial.

In a June filing, Didi reported revenue of about 42.2 billion yuan ($6.5 billion) for the three months ended March 31. Of that, 39.2 billion yuan came from its China mobility division while about 800 million yuan came from its international business.

In addition to its dominant position in China’s ride-hailing market, Didi operates in 15 other countries. Shares in Didi lost 5% last Friday after the news of the CAC probe, giving it a market value of $75 billion.

Previously, Apple has received a lot of heat for removing apps from its App Store in China on the Chinese government’s requests. Even on this matter, the company has not issued an official statement.