Didi wins approval to restart new user registration for ride-hailing service

Didi is resuming new user registration on Monday, it said on its Weibo social-media account. That suggests Didi’s app will soon return to mobile app stores. In 2021, Chinese authorities ordered app stores to remove Didi’s services as they targeted the ride-hailing giant in a cybersecurity probe.

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

The Cyberspace Administration of China, which led the probe, didn’t respond to a request for comment.

The long-awaited approval comes a year and a half after the ride-hailing giant was targeted in a cybersecurity probe. It also follows a series of steps recently by Chinese regulators that have helped remove some uncertainty that clouded the country’s internet sector since officials began a crackdown in late 2020.

Companies including Didi, Alibaba Group Holding Ltd. and its fintech affiliate Ant Group Co. were targeted by regulators in the clampdown. Some have faced big fines, while the market value of China’s largest publicly listed tech firms have tumbled.

China’s central bank said last week that Ant, whose blockbuster initial public offering was called off in 2020, has completed a required rectification of various business lines. Last month, China also fully resumed government approvals for videogames after a suspension that started in June 2021.

The Wall Street Journal reported in December that government officials were preparing to wrap up investigations against internet companies as economic conditions deteriorated, including 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 a data-security investigation into the company.

The suspension of Didi’s new user registration in China and removal of mobile apps from stores have curbed the company’s growth. Before the listing, Didi had 377 million annual active users in China, or about 86% of its global user base, it said in its listing prospectus. In 2021, Didi had more than 92% of revenue from its China mobility business, the company’s annual report showed. Didi and its rivals were hit hard last year as people’s movements were reduced due to Covid-19 lockdowns and other strict pandemic control measures in the country.

Since the probe, Didi’s stock price plunged and its fourth-quarter revenue in 2021 fell 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. Still, tighter oversight has become a new norm for the technology sector.

China’s transportation regulator in December summoned 15 ride- and truck-hailing companies, including Didi, requiring them to protect the interest 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, a rule that Didi and many other companies haven’t fully followed for years.

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

Didi didn’t immediately respond to a request for comment on the government permits.