DiDi Global has suspended plans to expand in Europe partly because of concerns over how the Chinese ride-hailing company handles passenger data, according to a person familiar with the matter.
Plans to challenge Uber Technologies in Europe, including several British cities, have been paused and some jobs will be cut, said the person, who asked not to be identified discussing private information. The European expansion will be suspended for at least a year, according to the Telegraph, which earlier reported the news of the suspension.
“We have established an international talent hub in the UK, recognising the exceptional quality of people in the market,” a company spokesman said in a statement. “Beyond that, any personnel matters remain strictly confidential.” The DiDi spokesman also said that the company will “continue to explore additional new markets”, and had recently launched services in South Africa, Ecuador and Kazakhstan.
The Chinese transportation giant had initially considered rolling out service in European markets including the UK, France and Germany as soon as the first half of this year, people familiar with the matter said in February. At the time, the company was hiring locally and setting up a team dedicated to Europe, they said.
The news that the company, which is dominant in China, might be expanding sent shares of potential rivals, such as Uber and Berlin-based Delivery Hero lower. Didi began offering car-hailing services in Russia last year and it’s already an investor in Estonia-based Bolt Technology.
Crackdown
But since then, China has begun a regulatory crackdown on ride-hailing fees. The new restrictions could cut DiDi’s margin in the business in half, according to calculations from Bloomberg Intelligence analysts. The new regulation “may accelerate an exit from unprofitable international markets where it faces unrelenting competition in ride sharing”, the analysts wrote in a report.
DiDi said last month that it would halt registration of new users during a Chinese government review into its cybersecurity practices. The Cyberspace Administration of China said the move is to prevent data security risks, safeguard national security and protect public interest.
In an article in the Times earlier this month, UK lawmakers had also called for DiDi’s roll-out in the country to be closely monitored over concerns that local user data could be accessed by China. — Reported by Amy Thomson and Ivan Levingston, (c) 2021 Bloomberg LP