China fines Didi more than $1 billion for data breaches, sources say

July 19 (Reuters) – Chinese authorities are preparing to fine more than $1 billion on taxi company Didi Global, people familiar with the case said Tuesday, a move that could end to an investigation into the company’s cybersecurity practices.

People said the fine would amount to more than 8 billion yuan ($1.28 billion), accounting for about 4.7% of Didi’s total revenue of $27.3 billion last year. They declined to be identified as the information had not yet been made public.

The Wall Street Journal first reported on Tuesday the possible size of the fine.

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The taxi company did not immediately respond to a request from Reuters for comment.

Didi’s fine would be the largest regulatory fine imposed on a Chinese tech company since e-commerce giant Alibaba Group (9988.HK) and delivery giant Meituan (3690.HK) were fined $2.75 billion and respectively last year. $527 million from the Chinese antitrust regulator.

Alibaba’s fine was equivalent to about 4% of its domestic sales in 2019, while Meituan’s was equivalent to 3% of its domestic sales in 2020.

Didi’s punishment could pave the way for Beijing to relax a restriction that prohibits it from adding new users to its platform and to reinstate its apps in domestic app stores.

Co-founded in 2012 by former Alibaba employee Will Wei Cheng and backed by SoftBank Group (9984.T) and Uber Technologies (UBER.N), Didi previously set aside 10 billion yuan for a possible fine, Reuters reported earlier.

The Didi logo is seen on the facade of the company’s headquarters in Beijing, China, Nov. 9, 2021. Photo taken Nov. 9, 2021. REUTERS/Yilei Sun

The company has struggled to return its business to normal after angering Chinese regulators by going ahead with its $4.4 billion New York listing in June 2021, despite being asked to release the float in the to put on hold.

Days after Didi went public, China’s powerful internet watchdog, the Cyberspace Administration of China, launched a cybersecurity investigation into the company’s data practices and ordered app stores to remove 25 of Didi’s mobile apps.

The restrictions have removed Didi’s dominance and allowed rival ride-hailing services from automakers Geely (GEELY.UL) and SAIC Motor (600104.SS) to gain market share.

The company announced it would delist from the New York Stock Exchange in December and won shareholder approval for the plan in May. read more

Didi’s shares skyrocketed during its initial public offering (IPO), giving the company a valuation of $80 billion. It was the largest IPO in the US by a Chinese company since 2014.

In addition to Didi, in July 2021, the CAC also launched cybersecurity assessments from Full Truck Alliance (YMM.N) and online recruiting firm Kanzhun Ltd.

Kanzhun and Full Truck Alliance said on June 29 that the regulator had given their apps the green light to resume new user registrations. read more

($1 = 6.7405 Chinese Yuan Renminbi)

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Reporting by Julie Zhu and Xie Yu in Hong Kong; Yingzhi Yang in Beijing and Nivedita Balu in Bengaluru; Editing by Aditya Soni and Edmund Blair

Our Standards: The Thomson Reuters Trust Principles.