China Fines Didi $1.2 Billion as Tech-Sector Pressures Persist

The authorities in China on Thursday fined the country’s ride-hailing giant, Didi, $1.2 billion for data security violations, the latest in a string of regulatory actions that have laid low China’s once soaring internet sector.

The penalty, announced by China’s internet regulator, the Cyberspace Administration of China, ended a yearlong investigation into the data practices of the ride-sharing giant that spoiled a blockbuster listing in the United States and ultimately led to a decision to delist from the New York Stock Exchange. The regulator said it would also fine two top executives at the company.

The firm violated several Chinese data security laws by collecting millions of addresses, phone numbers, images of faces, and other data.

The eye-watering fine most likely clears the way for the onetime Wall Street darling to list its shares in Hong Kong. But the regulator’s announcement did not address whether Didi would be allowed to put its app back on Chinese app stores and to again register new users. The government had imposed those restrictions on Didi’s operations last July as part of its investigation.

The fine broadly matched penalties paid out by other Chinese internet giants, in terms of the share of the companies’ annual revenue, during a nearly two-year regulatory crackdown on the sector. Some analysts have pointed to signs that a frenzied period of rule-making and harsh enforcement by China’s regulators may be on the wane.

But tech firms like Didi face a long road to recovery in the face of a broader economic slowdown and drags on activity resulting from China’s strict Covid controls, which have prompted repeated, scattered lockdowns of cities around the country.

In a statement, Didi said that it accepted the punishment and would take it as a warning to improve its data security. “We sincerely thank the relevant authorities for their inspection and guidance, and the public for their criticism and supervision,” the company said.