Why Once Invincible Didi Chuxing Is Looking Mighty Vulnerable Now
This article first appeared in Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.
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.