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Data Sheet—Why Once Invincible Didi Chuxing Is Looking Mighty Vulnerable Now

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Last Friday afternoon, a 27-year old driver for Hitch, a carpool service run by Chinese ride-hailing giant Didi Chuxing, picked up a 20-year old woman seeking transport from her home city Zhejiang province to a birthday party in a nearby town. Instead of taking her to the destination, the driver raped her, stabbed her, and rolled her body off a cliff. Police apprehended the driver the next day. He has reportedly made a full confession.

The attack has done grave damage to the Chinese public’s trust in Didi, the world’s largest ride-hailing venture by number of rides. The venture has suspended operations of the Hitch car service, fired two of its top executives, and Didi founder Cheng Wei and president Jean Liu issued an abject public apology. But details of the murder, and revelations suggesting Didi might have done more to prevent it, have provoked national outrage. According to The Atlantic, on Weibo, China’s equivalent of Twitter, the hashtag #BoycottDidi has drawn more than 1 million views. China’s state press has called on regulators to increase oversight of new technology services.

It is a stunning fall from grace for a company that, until only a few months ago, was celebrated as the quintessential example of how China’s homegrown tech upstarts can triumph over Silicon Valley interlopers. Didi forced Uber’s surrender from China in 2016, following a year-long battle that cost both companies billions of dollars. Today Didi’s backers include Uber, SoftBank, Alibaba Group Holdings, and Tencent Holdings. A December 2017 funding round valued Didi at $56 billion.

After a report in May that a 21-year old flight attendant had been murdered by an unregistered Hitch driver, the company tried to improve security, for example by limiting the hours during which carpool drivers could pick up passengers of the opposite sex. But Friday’s atrocity suggests Didi’s efforts didn’t go far enough.

The alleged murderer was driving a car with forged license plates and Didi received a complaint against him just one day before the attack from another female passenger, who told the company that he had driven her to a remote route and followed her after she left the car. Didi’s customer service promised to follow up in two hours but didn’t.

Cheng and Liu acknowledged the tragedy showed the company had been blinded by “vanity” and had “raced non-stop riding on the force of breathless expansion and capital.” Didi is among a score of leading Chinese tech companies to suffer growing pains this summer and, as the murder case suggests, for many of China’s tech firms, the problems are homegrown. As China’s tech sector matures, many ventures are struggling to make the transition from upstart to incumbent.

Clay Chandler
@claychandler
clay.chandler@timeinc.com

NEWSWORTHY

Where’s my ten foot pole? Speaking of China, Chinese electric carmaker NIO is listing on the New York Stock Exchange in a deal aimed at raising $1.3 billion, which would value the startup at $8.5 billion. But the company is barely off the ground, having sold only 500 cars and bringing in $7 million in revenue in the first half of 2018. Initial public offerings of companies priced at valuations of 100 or more times their trailing 12 month sales have a poor track record. The reported deal would value NIO at more than 1,000 times its trailing sales.

Where’s my ten foot pole? Chapter two. Remaining in region, Google’s plans to create a censored search engine for the Chinese market drew complaints from more than a dozen human rights groups. “By accommodating the Chinese authorities’ repression of dissent, Google would be actively participating in those violations for millions of internet users in China,” Tom Mackey of Amnesty International told Buzzfeed.

Lockdown. With the proliferation of fake accounts and false info that inundated Facebook starting to show up on Instagram, the photo sharing unit on Tuesday announced a series of new security measures, including greater support for two-factor authentication and more disclosure about suspicious accounts. Meanwhile, among the biggest users of Instagram—teenagers—are becoming more aware of their smartphone addiction. Some 54% of teens say they use their phones too much and 57% say they are taking steps to limit social media usage, according to a new poll by Pew Research.

Everything old is new again. Not enough to watch on TV yet? Amazon is working on yet another video streaming service, this one to be offered free with advertising over its Fire TV platform. The service is said to be much like Roku’s free channel, which runs a mix of old movies and television shows. Amazon is also reportedly speaking with major Hollywood studios such as Sony and Paramount Pictures about financing new movies in return for carrying the flicks on its Prime Video service.

They call that synergy. Some new AI-powered features are coming to Microsoft’s OneDrive for Business and SharePoint, including free, automatic transcription of video and audio files and a system that will prompt meeting attendees to share files afterwards that the AI determines might be relevant.

Shiny new things. It’s a busy time of year for new hardware introductions, what with the rush to woo back to school, and later holiday, shoppers and the IFA show going on in Berlin. Bose rolled out a line of smart speakers, Dell offered new laptops including a high-end Chromebook, and Intel unveiled new CPUs aimed at laptops that incorporate faster Wi-Fi capability.

Fortune is coming to Los Angeles. In the area? Join us at the Worldz summit, October 17 to 18 at the Port of Los Angeles, for our Future 50 list reveal. We’ll be in good company: Recently announced “masters” for the event include Droga5 CEO Sarah Thompson, Players’ Tribune CEO Jeff Levick, Citi global consumer CMO Jennifer Breithaupt, Ducati N.A. CEO Jason Chinnock, and the UN’s Alaa Murabit. Read more details.

FOOD FOR THOUGHT

As noted above with Instagram’s enhanced security measures, the scourge of bad behavior and bad information online is hardly going away. That makes the 2015 book The Internet of Garbage by new New York Times editorial board member Sarah Jeong more valuable than ever. Though the book is out of print, a new electronic edition is being made available by The Verge, where Jeong used to work. Here is an excerpt of her new preface:

I described the marketplace of ideas in my book, criticizing it as something that has never truly existed for everyone across race and gender. But I did not criticize it enough. In 2018, the marketplace of ideas is sick unto death, close to being replaced by an SEO nightmare populated with the intellectual equivalents of malware, viruses, and banking scams.

I think The Internet of Garbage still provides a useful framework to begin to talk about our new dystopia, and it continues to be surprisingly relevant in many ways. But I wrote the book with a tone of optimism I did not feel even at the time, hoping that by reaching the well-meaning policy teams across Silicon Valley, I might be able to spark change for the better.

Not only did that change never quite solidify, but the coordinated, orchestrated harassment campaigns of Gamergate that I very briefly touch on in Chapter Two have since overtaken our national political and cultural conversations. These twisted knots of lies, deflection, and rage are not just some weird and terrible online garbage. They shadow executive orders, court rulings, even the newly appointed judiciary. They will haunt us for years to come. We are all victims of fraud in the marketplace of ideas.

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The Hot New Subject on Campus? It’s Blockchain By Jeff John Roberts

BEFORE YOU GO

The concept of a public but tamper-proof ledger known as a blockchain lived in obscurity until the rise of digital currencies like bitcoin. But it was first envisioned by cryptographers Stuart Haber and Scott Stronetta in 1991 as a way to verify the authenticity of digital documents. And the pair has been publishing a key output of their system, a unique hash value, in the classified section of the New York Times once a week since 1995. All the news that’s fit to print, indeed.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.