China fines Didi for breaching data security laws

The ride-hailing giant’s data-processing activities endangered national security, the cybersecurity regulator charged
China fines Didi for breaching data security laws

China has fined ride-hailing giant Didi Global 8.026 billion yuan ($1.2 billion) following a year-long probe into the company’s data-collecting practices, the Cyberspace Administration of China (CAC) announced on Thursday.

According to the CAC statement published on its official website, the regulator concluded that Didi had violated Chinese laws governing network security, data security, and personal information protection by illegally collecting information on the users of its ride-hailing app over a seven-year period starting in June 2015. It was also concluded that the company’s data-processing activities had jeopardized national security.

The CAC also fined two Didi executives, founder and Chief Executive Cheng Wei and President Jean Liu, 1 million yuan each (around $150,000), having found them responsible for the violations.

In an online statement on its Weibo account, Didi said it had accepted the CAC decision.

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The probe into Didi’s data-collection practices was first announced last year, days after Didi’s initial public offering on the New York Stock Exchange. According to Reuters sources, despite demands from China’s regulators to pause its US listing until the probe had been concluded, Didi pressed ahead with the float, drawing the ire of Beijing. Under regulatory pressure, the company was forced to delist from the NYSE and make plans to list in Hong Kong instead. Didi’s stock, which soared after its US IPO, thus giving the company a valuation of $80 billion, suffered greatly from the delisting, losing over 80% of its value.

Due to the CAC probe, Didi was also banned from adding new users to its app, which was later removed from app stores in China. The CAC’s announcement did not specify whether the fine meant that the company would now be allowed to return to Chinese app stores and register new users.

Didi’s fine is the largest for a Chinese technology company since e-commerce giant Alibaba Group and service platform Meituan were fined a respective $2.75 billion and $527 million last year by China’s antitrust regulator.

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