Didi Chuxing says app takedown may adversely impact revenue in China

Ride-hailing company Didi Chuxing Technology Co., has said that a regulatory order for its apps to be removed from China could hurt its revenue in the country. In a statement, the company speculated adverse of the takedown but stopped short of elaborating on the extent of the potential impact. However, experts have opined otherwise reckoning that Didi Global already has a massive user base in China and app removal would have little or no effect on its earnings.

Known as China’s Uber, the vehicle for hire firm has a current market value of US$75 million. Didi reported first-quarter revenue of about 42.2 billion yuan (US$6.5 billion), more than 90% of which comes from its China mobility division. In addition to its dominant position in China's ride-hailing market, it operates in 15 other countries.

Earlier on July 4, the Cyberspace Administration of China (CAC) banned smartphone App stores from selling Didi Global Inc.’s app alleging that the company was collecting users’ private information. Subsequently, China’s cyberspace watchdog, on Monday, informed that it was further investigating online recruiter Zhipin, truck-hailing apps Huochebang and Yunmanman. While the Chinese agency has claimed users’ privacy as the reason, many have pointed out Beijing’s increased crackdown on IPOs. It is imperative to note here that Didi Global listed at the New York Stock Exchange only last week.

CAC bans Didi Global

Few days after China's largest ride-hailing service, Didi rocked on the New York Stock Exchange by becoming one of the largest US IPOs in recent years, the Chinese authorities on Sunday banned the application. Reasoning the action, China’s cybersecurity regulator said that the app of posing a security threat as it improperly collected and used its customers’ personal data. Recently on June 30, Didi Global Inc (DIDI.N) shares had ended the first day of U.S. trading with over their initial public offering (IPO) price, valuing at $68.49 billion in the biggest U.S. listing by a Chinese company since 2014.

However, the existing 600 million users of the application and drivers customers can continue using Didi normally, so long as they have already downloaded the app. But new customers will not be able to start using the service until the company addresses the regulators’ data concerns. In response to the ban, application developers said that they will fully cooperate with the relevant government authority. 

Image: AP/AlexBudin/Twitter