Chinese Ministry Industry and information technology announced on Monday a six-month campaign to regulate Internet companies, especially practices that “disrupt the market order, violate consumer rights or jeopardize data security.” This followed repeated penalties against technology giants, including Alibaba, Baida and Tencent, for violating antitrust laws, and a new plan to restrict foreign lists of Chinese companies.
Suppression has also extended to successes that were once considered champions of domestic breeding. Didi Chuxing’s city driving company beat Uber in China and broke through in Latin America and Africa. On June 30, the company raised $ 4.4 billion through an IPO on the New York Stock Exchange – the largest for the Chinese company since Alibaba in 2014.
Two days later, Chinese authorities launched an investigation into the company. Citing “serious violations of laws and regulations in the collection and use of personal data,” Didi was withdrawn from Chinese app stores and banned from registering new users. According to Bloomberg, penalties could range from fines to forcible removal from the list. Shortly afterwards, another agency charged antitrust fines to Didi and other technology companies for mergers and acquisitions in the last decade.
Allegedly, Chinese regulators warned Didi about postponing the IPO, but she decided to continue listing. Other Chinese giants appear to have received a letter: ByteDance, owner TikTok, which allegedly considered an overseas IPO, put those plans on hold after meetings with regulators, the sources said The Wall Street Journal. On Tuesday, Tencent he told Reuters has temporarily suspended new Chinese registrations on the ubiquitous WeChat app “to comply with all relevant laws and regulations.”
The reasons for the seemingly sudden crackdown are not clear, but it comes amid President Xi Jinping’s move to establish greater authority over all aspects of life. Observers say the government, empowered by a series of new laws, wants to regain control of technology companies that have become too big, too powerful and willing to abuse their market share. At the same time, Xi seems to be adapting the country’s technology sector to give priority to state development in areas he cares about, such as the creation of revolutionary technologies in artificial intelligence. And there is a growing fear that exposure to foreign markets – and foreign regulators – is too risky in an increasingly hostile international environment.
“Xi Jinping is always concerned about political loyalty: to him, to the Communist Party, to party ideology,” says Susan Shirk, president of the 21st Century China Center at UC San Diego. She says Xi can’t be sure of the loyalty of China’s private technology titans, who have become rich and famous – and sit in large data warehouses. “It just makes him very nervous because he doesn’t know what he’s going to do with all these resources. And at some point they might be able to use them to organize a challenge to Xi Jinping or even for party rule. ”
Didi’s IPO on June 30, the day before the 100th anniversary of the Communist Party, provoked suggestions that the time and the American census were unpatriotic. And July 5th editorial board in public administration Global Times she said Didi, with 80 percent of the market in China, holds sensitive data on personal travel and habits. It was said that the government will not allow internet giants to “become creators of data collection and use rules”, adding that “standards must be in the hands of the government”. Rumors circulated on Chinese social media that Didi handed over user data to US regulators. The murmur of internet nationalists became loud enough that the company posted a denial on its official Weibo account.
Following the IPO, a 2015 report by the company’s research arm was posted online. The paper is described in detail arrivals and departures of civil servants, including which agencies worked the longest hours, based on rich user data. That kind of visibility – combined with Didi’s very detailed maps – can make the authorities nervous.
“Obviously, the data Didi holds is considered sensitive from a national security standpoint,” says Samm Sacks, a senior associate at Chinese Yale Law School Paul Tsai. Didi has also faced criticism in the past for this led murder investigations, because they did not protect user data and because of the use of personal data he collected to charge drivers different prices.