China’s year-long, once seemingly never-ending investigation into Didi finally reached a conclusion on Thursday, with authorities imposing a massive fine equivalent to $1.2 billion on the ride-hailing giant over alleged violations in cybersecurity, data security, and personal information protection.
The RMB 8.02 billion ($1.19 billion) penalty, which was set at 4% of Didi’s 2021 revenues, comes as Chinese policymakers have reportedly been mulling over whether to call an end to their crackdown on the country’s technology sector in the face of the country’s slowing economy.
While Didi will now be looking to move past the year-long investigation, the Chinese mobility behemoth will have to be much more cautious about how it operates and how it deals with regulators going forward. On Thursday, the country’s internet watchdog issued unusually harsh criticism, calling Didi’s breach of data privacy and national security rules “a serious offense with negative influences.” The company said later that day that it will continue carrying out a comprehensive rectification of its operations, without giving a timeframe.
Although the fine itself won’t hurt too much in Didi’s finances, the probe is undoubtedly another landmark case for the Chinese tech sector following Beijing’s antitrust crackdown on Alibaba a year ago. So how did we get here? Below is a look back at the bumpy road that Didi has traveled over the past 12 months.
June 30, 2021 – Didi goes public in the US
- Didi raised $4.4 billion in its long-overdue initial public offering on the New York stock exchange last June, making it the biggest IPO from a Chinese company on a US exchange since Alibaba’s in 2014.
- Didi filed for a share listing on June 10, 2021, roughly around the same time that China’s market regulator reportedly opened an antitrust probe into the company. Didi had described reports of such a move as “unsubstantiated speculation.”
July 2, 2021 – Beijing officially launches an investigation into Didi
- Didi’s fortunes took a startling turn just days after its mega IPO when the Cyberspace Administration of China (CAC) announced it had launched an investigation into the company over alleged illegal use and collection of users’ data.
- The review was aimed at addressing “national security risks” as the government sees Didi’s mobility and traffic data as key to such concerns. This was followed by a ban on Didi’s mobile services from Chinese app stores on July 4, 2021.
July 6, 2021 – US shareholders sue Didi
- Didi faced two shareholder lawsuits in the US alleging that the company failed to properly disclose information that it was in talks with Chinese regulators over cybersecurity compliance issues ahead of its IPO. Multiple law firms also sought to bring additional class-action litigation against Didi, SCMP reported.
- Didi told Reuters that prior to its US listing it was unaware that China’s cyberspace watchdog would open a probe and suspend app downloads. A few days later, Beijing announced that seven central government departments had started an on-site inspection of the ride-hailer.
August 9, 2021 – SoftBank scales back China investment
- During SoftBank’s 2021 second-quarter results presentation, founder Masayoshi Son said that he would take a “wait-and-see” approach until the impact of regulatory action against Chinese tech firms became clearer. SoftBank’s Vision Fund was Didi’s biggest shareholder, holding around 20% of its equity ownership.
September 3, 2021 – Speculation is rife over probe’s end goal
- The cybersecurity review triggered a wave of speculation regarding possible resolutions to Didi’s regulatory crisis. On Sept. 3, 2021, Bloomberg reported that Beijing’s municipal government planned to wind up with a controlling stake in the ride-hailing giant. A few days later, Reuters reported that Didi’s president Jean Liu would leave the company in a few weeks. Didi denied both reports.
December 2, 2021 – Didi prepares to quit New York
- Didi announced that it had been in preparation to delist from the New York stock exchange while pursuing a new listing in Hong Kong, a move reportedly requested by Chinese regulators who feared the leaking of sensitive data to US authorities.
March 11, 2022 – Regulators put the brakes on Hong Kong listing plan
- In March, Didi suspended its preparations for trading shares in Hong Kong, a move initially slated for as early as this summer, after being informed by Chinese regulators that their proposals to comply with cybersecurity and data rules failed to meet requirements, Bloomberg reported.
June 11, 2022 – Didi delists from NYSE
- Didi delisted in the US on June 13, 2022, a few days after filing paperwork with the US regulators and garnering support from most shareholders. They were left with little choice, as the company had told them that it had to do so before it could achieve a settlement with Chinese authorities.
July 21, 2022 – Didi fined for$1.2 billion
- Hitting the ride-hailing titan with a massive $1.2 billion fine on Thursday, cybersecurity regulator the Cyberspace Administration of China said that the company had unlawfully collected vast troves of user data since June 2015. Didi also posed a serious threat to national security in the way it processed data, the CAC said. Didi’s CEO Cheng Wei and President Jean Liu were each fined RMB 1 million as part of the reprimand.