China has fined ride-hailing giant Didi 8 billion yuan ($1.2 billion), regulators announced on Thursday, ending a year-long probe into alleged data security breaches.
The investigation found “conclusive evidence” that Didi committed violations of “egregious nature,” the Cyberspace Administration of China (CAC) said in a statement.
It accused Didi of illegally storing the ID information of more than 57 million drivers in plain text instead of a more secure format.
The regulator said the company also analyzed passenger data without their knowledge — including photos on their cellphones and facial recognition data.
“Didi’s illegal operations have posed serious security risks to the security of the country’s key information infrastructure and data security,” CAC said.
“Even though regulators have ordered fixes, broad and deep fixes have not been implemented,” she added.
According to the supervisory authority, Didi’s violations took place over seven years from June 2015.
CAC also accused Didi of unspecified national security violations in its data processing activities.
The firm was also found to have violated the Cybersecurity Act, the Data Protection Act and the Personal Data Protection Act — a landmark code introduced last year and modeled on the European Union’s GDPR legislation.
– Tech Raid –
Didi was one of the most prominent targets of a widespread crackdown on China’s tech sector, which had experienced years of runaway growth and the emergence of outsized monopolies before regulators stepped in.
The fine amounts to more than four percent of total sales of $27.3 billion last year.
“We sincerely accept (and will) obey this decision,” Didi said in a statement on social media.
“We sincerely thank the relevant authorities for their inspection and guidance… We will take this as a warning… (and) continue to strengthen the construction of network security and data security.”
Didi’s fine is the highest imposed by Chinese authorities since e-commerce giant Alibaba was fined around $2.75 billion for anti-competitive practices in April 2021.
The ride-hailing company found itself in hot water in June last year after it pushed ahead with an IPO in the United States, reportedly against Beijing’s wishes.
Days after the company raised $4.4 billion in New York, Chinese authorities launched a cybersecurity investigation into the company and dropped its shares.
Since then, Didi’s app has been removed from Chinese stores and has failed to register new users.
China’s regulatory crackdown has eased this year as it grapples with the economic fallout from its zero-Covid strategy and the country struggles to meet its 5.5 percent growth target.
However, there is still a strict regulatory environment for tech companies: President Xi Jinping last month called for stronger oversight and security in fintech.
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