A Cyberspace Administration of China (CAC) probe of Didi Global, which led to the company delisting from the New York Stock Exchange, has resulted in a massive 8.026 billion yuan ($1.2 billion) fine imposed on the ride-hailing giant on Thursday.
This is the latest in a series of crackdown on tech companies by the Chinese authorities.
The CAC decided that the company violated country’s network security law, data security law and personal information protection law. It also singled out Cheng Wei, Didi’s CEO and founder, and president Jean Liu, and fined each of them 1 million yuan (appx $150,000).
Chinese consumers have become very privacy conscious in recent years. This has led the authorities to impose regulations on platforms that handle sensitive information such as locations.
The investigation found Didi had illegally collected millions of pieces of user information over a seven-year period starting June 2015 and carried out data processing activities that seriously affected national security.
CAC said in a statement: “Didi’s illegal operations have brought serious security risks to the security of the country’s key information infrastructure and data security.”
CAC did not clarify whether Didi would now be able to add new users or restore its presence on app stores in China – the two orders that took the wind out of the company’s fast-paced growth.
Didi said it accepted the punishment and would take it as a warning to improve its data security.
“We sincerely thank the relevant authorities for their inspection and guidance, and the public for their criticism and supervision,” the company said in a statement.
On July 1 last year, the company’s stock, priced at $14 a share, began trading at $16.65 and went up as much as 28.6 percent during that day. Didi’s market cap on that had jumped to nearly $79 billion. Less than six months later, it delisted from the NYSE with future plans to list in Hong Kong.
Some experts believe the fine could clear the deck for the Hong Kong listing.
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