China Cybersecurity Regulator CAC Fines Didi $1.19B for Data Security Law Violations

Didi has responded to the fine penalty. The company said in an online statement that it accepts the regulator’s decision.

The Cyberspace Administration of China (CAC) has fined Chinese transport company Didi 8.026 billion yuan, equaling $1.19 billion, for violating data security laws. The cybersecurity regulator in China came to the conclusion of the year-long probe that forced the transport company to delist from the New York Stock Exchange (NYSE). According to the CAC, the $1.2 billion fine was because Didi violated the country’s network security law, data security law, and personal information protection law.

People with knowledge of the matter revealed Didi triggered the attack from the regulator. The ride-hailing company went public in the US without waiting for a cybersecurity review of its data prices. CAC said it discovered through investigation that Didi illegally collected millions of user information for seven years. In addition, the research found that the company started collecting millions of pieces of user information in 2015. CAC added that Didi carried out data processing activities that impacted national security. The regulator said Didi’s violations are serious and “should be severely punished.”

CAC Penalizes Didi for Law Violations

In addition to fining Didi, the CAC imposed a 1 million yuan each penalty on the company’s founder and president. The cybersecurity regulators blamed Cheng Wei, the founder and CEO, and Jean Liu, the president. The Administration said the two executives are responsible for the law violations.

Didi has responded to the fine penalty. The company said in an online statement that it accepts the regulator’s decision. It promised to conduct self-examination and effect necessary amendments. The company has been unable to onboard new users since the cybersecurity review stated last year. Despite the Chinese regulators penalizing the company, there is no mention of if Didi will soon be able to add new users.

There has been a trend of a regulatory crackdown on technology companies in China. The regulatory action is cracking down on antitrust and data security rules violations. While Didi was under review for antitrust violation, Beijing was also looking into the company’s pricing mechanism. Didi’s investigation is considered a high-profile case as Beijing crackdown on Chinese tech companies. As a matter of fact, many believed that the CAC may impose more severe punishment on Didi beyond the fine penalty. Market Specialist at CGS-CIMB securities Singapore, Samuel Siew, stated:

“Prior to the conclusion of this, there were a lot of fears in markets that there would be more than just a fine. Now with its settling as just a fine, it’s lighter than what the possible implications were initially feared.”