Didi ‘Considers’ Data Deal With State-Backed Company

Image credit: Didi Chuxing

Chinese ride-hailing company Didi Global reportedly considering data deal with state-backed third party as it looks to resolve regulatory probe

Chinese ride-hailing firm Didi Global is reportedly considering handing over control of its data management and monitoring activities to a third-party company, as it seeks a way forward amidst a crackdown by domestic regulators.

The company is considering a range of options, including handing over control of its data to a third party, Reuters and Bloomberg reported.

Regulators have said they would prefer the involvement of a state-controlled company, Bloomberg said, while Reuters named government-controlled information security firm Westone as a top candidate.

Westone, which provides information security services and products, counts state-owned China Electronics Technology Cyber Security Co as its parent and largest shareholder.

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A plan being discussed could give Westone access to Didi’s servers to track its collection, transfer and usage of data, Reuters said.

The CAC has reportedly become concerned about the huge amounts of data collected by large, private companies and whether such data could wind up in the hands of a foreign power.

Didi denied it was planning to “hand over control of data”.

“Recent media reports concerning proposals for Didi to hand over control of data, introduce new major shareholders, and delist, etc. are untrue,” the company said in a statement.

Last month the Cyberspace Administration of China (CAC) launched a probe into Didi and stopped it from taking on new users over concerns with its handling of sensitive user data.

The move came days after Didi raised $4.4 billion (£3bn) in an initial public offering on the New York Stock Exchange. Didi’s shares have lost one-third of their value since the IPO.

Regulatory action

The company facilitates 25 million rides per day and has about 377 million active riders and 13 million annual active drivers in China.

Industry watchers say its NYSE IPO, which went ahead in spite of regulators’ concerns, was seen as a challenge to the government’s authority and that regulators are looking to use the situation as a test case.

One option reportedly under consideration would be to bring in a state-owned investor with larger holdings than Didi backers Softbank and Uber.

China has recently taken regulatory action against its biggest tech companies, including Alibaba, which was forced to pay a $2.8bn fine and make procedural changes.

The country has also cracked down on Bitcoin miners and social media firms, among others.

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