After an 18-month security investigation, Didi receives approval from China to reopen

On Monday, Didi, a major ride-hailing company, returned to the market after having its app suspended in China for 18 months. The action was taken at a time when China was beginning to loosen up on its three-year-old broad regulatory crackdown on the internet industry.

Chinese authorities demanded that Didi be removed from the nation’s app stores in July 2021, citing the fact that the company was “illegally collecting customer data.” In New York, Didi had her public debut earlier in the same month. Celebrations for the company, which raised a sizeable $4 billion from the initial sale, were short-lived as the incident soon became the source of its dispute with Beijing.

Didi failed to reassure the government that its cross-border data practices were secure prior to going public in the U.S., where the data of hundreds of millions of Chinese citizens may have been subject to investigation, according to numerous reports and an investor memo viewed by TechCrunch at the time. The error prompted China’s top cyberspace authority to launch a security inquiry that lasted a year and a half.

As evidenced by the following statement made by Didi’s parent firm on Weibo on Monday afternoon:

“Our company has taken significant steps to cooperate with the nation’s cybersecurity evaluation, address the security issues identified in the investigation, and conduct thorough rectifications,” the statement reads.

Didi was given the go-ahead to resume new user registration for Didi Chuxing, its primary ride hailing platform, with the help of the Cybersecurity Review Office, a relatively new entity created to address data security issues raised by internet companies.

In addition to a data overhaul, Didi allegedly had to pay a $1 billion fine for breaking the law. Since May of last year, it has been seeking to relist on the Hong Kong Stock Exchange, which is becoming a more popular option for Chinese internet companies dealing with escalating U.S.-China tensions.

Users of Didi were still able to use the app if they already had it on their phones prior to the reopening of user registration. But the software was under attack from vultures rivals. For instance, the third-party ride-hailing service Didi is increasingly being gathered by the Alibaba-owned mapping provider AutoNavi.

In the ride hailing industry, the day of unrestricted expansion is likewise long over. In recent years, China has tightened regulatory monitoring of the innovative industry, bringing it closer to parity with the conventional state-owned taxi sector.

Didi will undoubtedly be considerably more wary of the government’s red line after the regulatory rewrite.

According to the Weibo post, “the company will use efficient means moving forward to secure the security of the platform’s infrastructure and large data in order to preserve national cybersecurity.”