Beijing’s targeting of ride- and truck-hailing apps is intended to align companies with China’s increasingly sovereignty-centered network security standards, which will force Chinese tech firms to better align with Beijing’s strategic objectives. The Cyberspace Administration of China (CAC) announced on July 4 that ride-hailing firm Didi’s main app would be removed from Chinese app stores for violating laws related to collecting and using personal information, citing China’s Network Security Law. The following day, the CAC then announced similar measures restricting new user registration for two truck-hailing apps run by Full Truck Alliance (FTA), along with the talent recruitment platform Boss Direct Hire, again citing network security concerns. On July 6, China’s State Council announced it would tighten network security oversight, especially for overseas listings, for all Chinese firms, with the most likely motivator for these restrictions being potential leaks of Chinese “critical infrastructure” data into U.S. markets. All three firms have launched IPOs on U.S. stock exchanges in recent weeks, with Didi raising $4.4 billion on June 30 — marking the largest U.S. IPO of a Chinese company since Alibaba in 2014.

Scrutiny of Chinese firms is likely to continue until Beijing is confident in its control and oversight over crucial data flows. The most recent suspensions follow warnings from Chinese regulators against monopolistic practices and come amid Beijing’s campaign to better access and oversee private data from China’s tech firms. Prior to Didi and FTA’s June IPOs in the United States, China’s antitrust regulator in May warned major firms against monopolistic practices regarding user data and pricing. Since October, when Chinese tech giant Alibaba canceled IPOs on the Shanghai and Hong Kong exchanges, regulatory pressure against China’s tech firms has grown rapidly — hitting many of China’s big-name tech firms like Tencent, Meituan and now Didi. In this campaign, regulators have tended to target firms with large troves of private data, which are in many cases shielded from regulatory oversight or inaccessible to government agencies. Beijing cites concerns over user privacy and anti-market activity, but these claims have come amid concurrent campaigns by Beijing to build national public databases incorporating, for instance, private consumer credit data from Ant Group in order to better monitor consumer data on a market scale. China’s tech giants are increasingly serving global markets, as shown by Didi’s operations in 16 countries. Beijing’s definition of data sovereignty, meanwhile, is also expanding to include sectors far beyond traditional national security fields, as illustrated by regulators’ recent targeting of U.S. electric vehicle maker Tesla for potentially exposing navigation and geospatial data for Chinese users and government facilities. 

By better mobilizing private data to further its strategic objectives, Beijing will be able to boost economies of scale on policy initiatives like smart governance, monitoring of digital finance and citizen surveillance. Internally, Beijing is pressuring Chinese tech firms to align their research and development with China’s goal of global leadership in emerging technologies, like artificial intelligence, which increasingly includes unfettered government access to formerly private data. Thus, though targeting Chinese firms engaged in U.S. IPOs may hurt private access to foreign capital, Beijing will continue its scrutiny of and attempts to wrangle private data flows as China’s leaders view data as both crucial economic inputs and critical national security risks.