Didi Gains Green Light to Resume Sign-Ups for Ride-Hailing Service

Didi Global Inc. is a transportation company based in Singapore. The company offers a variety of transportation services, including ride-hailing, car-sharing, and bike-sharing. Didi Global is a subsidiary of Didi Chuxing, a Chinese ride-hailing company.

Approval from China's cybersecurity regulator to resume new user registration for its ride-hailing service was obtained by the company on Monday, the latest sign that Beijing is easing its grip on its internet giants.

Didi is set to resume new user registration on Monday, according to its Weibo social-media account. This suggests that the Didi app will soon be available again on mobile app stores. Didi's services were removed from app stores in 2021 as part of a cybersecurity probe by Chinese authorities.

Didi also said that it has fixed the security issues that regulators found during the investigation. It will take measures to protect the platform and data security and safeguard national security, it said.

The Cyberspace Administration of China, who were in charge of the investigation, did not respond to a request for comment.

After a long wait, approval has finally come for the ride-hailing giant, which was targeted in a cybersecurity probe 18 months ago. This follows a series of steps by Chinese regulators which have helped to clear up some of the uncertainty surrounding the country's internet sector, which began to crack down in late 2020.

Didi, Alibaba Group Holding Ltd. and its fintech affiliate Ant Group Co. were targeted by regulators in a recent clampdown. Some of these companies have faced hefty fines, while the market value of China’s largest publicly listed tech firms have taken a hit.

The central bank of China announced last week that Ant, whose highly anticipated initial public offering was cancelled last year, has completed the required rectification of its various business lines. China also resumed government approvals for videogames last month, after a suspension that began in June 2021.

Government officials are reportedly preparing to wrap up investigations against internet companies as economic conditions deteriorate. This includes allowing Didi's mobile apps to be restored to domestic app stores.

In July 2021, days after Didi's IPO on the New York Stock Exchange, Chinese regulators announced an investigation into the company's data security practices. This raised concerns among investors about the safety of Didi's platform and the potential for regulatory action against the company.

The recent suspension of Didi's new user registration in China and removal of mobile apps from stores has impacted the company's growth. According to Didi's listing prospectus, the company had 377 million annual active users in China as of 2020, accounting for 86% of its global user base. Didi's annual report for 2021 showed that more than 92% of the company's revenue came from its China mobility business. Both Didi and its rivals have been affected by the reduced movement of people due to Covid-19 lockdowns and other pandemic control measures in China.

Since the probe, Didi's stock price has plunged and its fourth-quarter revenue in 2021 has fallen 13% from a year earlier. In June, Didi delisted from the U.S. exchange after telling shareholders it was required to do so to resolve the cybersecurity investigation. Being able to bring back its apps in China is also a prerequisite for the company to relist its stock in Hong Kong.

In July, Chinese authorities fined Didi the equivalent of about $1.2 billion. The internet regulator said at the time that an investigation found Didi had flouted the country’s cybersecurity, data security and personal information protection laws. Didi said it would “resolutely comply” with the regulatory decision and other rules.

China's top officials have repeatedly pledged to support the country's platform companies as it pivots to rescue its weakened economy. However, tighter oversight has become a new norm for the technology sector.

In December, China's transportation regulator summoned 15 ride- and truck-hailing companies, including Didi, requiring them to protect the interests of users and drivers as well as to compete in an orderly way.

In China, vehicles and drivers are required to obtain government permits for ride-hailing services. However, many companies, including Didi, have not been following this rule for years.

According to government data, the number of orders carried out by vehicles and drivers with required government permits has increased from 40.8% in July 2021 to 64.5% in December. However, Didi and its affiliate Piggy Express have been less compliant than some of their biggest rivals, such as Cao Cao Mobility, which is backed by Zhejiang Geely Holding Group Co Ltd.

Didi did not respond immediately to a request for comment on the government permits.