Why was China's Uber, Didi Global, fined?

Years ago Didi and Uber competed in China. In 2016, after a two-year price war, Didi bought Uber's China operations. Didi raised $4.4 billion in an initial public offering on June 30, 2021 in New York. The company has a market capitalization of approximately $74.5 billion.

In July 2022, China imposed an administrative fine of 8 billion 26 million yuan ($ 1.2 billion) on Didi Global for violating regulations on internet security and personal data protection. In the statement made by the China Cyberspace Administration (CAC), it was stated that the company violated the "Internet Security Law", "Data Security Law" and "Personal Data Protection Law" at the end of the investigations.

In addition to the $1.2 billion administrative fine imposed on the company, Chairman of the Board of Directors Ching Wey and General Manager Liu Qing were also fined 1 million yuan ($150 thousand). The Chinese company, which has more than 550 million users worldwide, faced investigation in its country after its shares went public on the New York Stock Exchange on July 1, 2021.

Chinese regulators launched a cybersecurity investigation against Didi on the grounds that it did not meet the requirement to conduct a security review before going public. The institution, which detected serious violations regarding the company's collection and use of personal data in the investigation, ordered the removal of 25 applications belonging to the company from its internet stores in China on July 9.

CAC also prohibited Didi from accepting new customers until the investigations were concluded. After the investigation, Didi decided to withdraw from the New York Stock Exchange on 3 December. It was reported that the shares of the company will be transferred to the Hong Kong Stock Exchange.

In China, the government's regulatory interventions on internet companies have intensified since the end of 2020. Internet companies that provide online commerce, shopping, transportation and social media services and have achieved great power in their fields of activity have faced investigations and penalties.

While investigations were initiated against internet companies that went public abroad such as Alibaba, Tencent and Didi, new rules and restrictions were imposed on the domestic activities of the companies. Initially launched for violations of antitrust regulations, the investigations focused on cybersecurity and personal data protection in the following months. In the country, internet companies that collect information about more than 1 million users are required to undergo a cyber security investigation.