DiDi- Beijing Cracking Hard on Tech Companies

Beijing is cracking hard on its tech companies. After Jack Ma, now its DiDi. Chinese Government actions are communicating that the Government wants to showcase its power in taming the most powerful tech companies. For years, Tech companies have been used by Beijing for exercising its economic and Geo-Political influence around the World. XI Jinping is now exercising its power to keep the large enterprises within the command of the party rule.   

Chinese Regulators have announced new set of rules impacting the mobility industry. The rules will create challenging business environment for Didi Chuxing, which is market leader in the ride-hailing industry. Various regulatory agencies have come together for putting together the rule, which will fundamentally impact the operational cost of DiDi and have an adverse impact on its business and competitiveness.

DiDi is the World’s leading technology platform providing diverse set of solutions such as ride hailing, shared mobility, taxi services, financial services, food delivery etc through its app-based services and has presence in major parts of the world including Latin America, Asia Pacific Russia. It has presence in over 4000 cities in 17 countries. DiDi’s platform is innovative and uses AI driven technologies for building mobility solutions by bringing together the drivers, vehicle owners, and delivery partners for creating flexible work environment and related income opportunities. DiDi has been instrumental in generating synergies between the tech, automobile and the taxi industry for solving the environmental as well as employment challenges for creating a futuristic transport ecosystem.

The new guidelines will make it mandatory for the companies to employ the drivers. Didi business model is based on flexible work environment and is working on autonomous solutions. The Cost and competitiveness will be under the stress and company may lose valuation to global peers.   According to recent media reports, Chinese regulators are also pressing Didi Global Inc management for considering to delist from New York Stock Exchange.

Earlier in July, Didi was compelled by Chinese Government to remove its app as app was collecting personal information of users in violation to Government policies. According to the announcement from Cyberspace Administration of China (the CAC) and confirmation from the Company, DiDi Chuxing app was alleged for collecting personal information in violation of laws and regulation of PRC.  had the problem of collecting personal information in violation of PRC laws and regulations related to cybersecurity. Didi was required to strictly comply with the cybersecurity regulations, rectify the problem as well as ensure security of personal information’s of the users. New registrations were suspended whilst maintaining normal operations globally.

Global Times had earlier confirmed that DiDi has personal data which can be used for knowing deeper about individuals and poses a risk. No other technology firm in China can match level of data, that DiDi possess.  Chinese Authorities are tough on DiDi ever since its listing in US, raising more than 4 billion USD. SoftBank is one of the biggest investors in DiDi.

Xi Jinping is consolidating his powers and holds all top civil and military positions. Cracking on the tech Industry can be coming from his desire to be more assertive about his power.

Bureau Galactik Views

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