It was in late August this year when Xiao Zhao, a 20-year-old woman from Wenzhou province in the East of China, went missing on her way to a birthday party. She had called Didi Chuxing’s ride sharing service, Didi Hitch, to get a ride from Yueqing to Yongjia. Along the way, the driver diverted from the obvious route, turning off onto steep mountain roads. Zhao messaged a friend, telling her she thought something was wrong. At around two in the afternoon, Zhao sent two more messages to her friend. They simply said: "help" and "save me". Her friend immediately contacted Didi, but was put on hold. Zhao’s parents called the police. In the early hours of the next morning, local media reported, police officers arrested a 27-year old man, who led them to Zhao’s body; he had raped and killed her. Then he threw her body off a cliff.
It was the second time a Didi driver was suspected of killing a passenger in just a few months; back in May, a 21-year-old flight attendant in Zhengzhou city had been killed in similar circumstances. Damningly, the company was forced to admit that it had received complaints against both drivers, but had failed to act. Zhao’s death was the fourth murder committed by a driver during the past two years. The news triggered a deluge of fresh allegations of sexual assault against drivers working for the platform. Soon, Chinese internet users sent the hashtag #womankilledinDidiHitch trending; it was seen more than 430 million times on Chinese social media service Weibo, while prominent Chinese celebrities posted photos of themselves deleting the app.
It was a crucial moment for Didi, which just a year ago was Asia’s most valuable startup, with a valuation of $56 billion. The company has 550 million registered users in China, more than half of the country’s smartphone users. The platform has 31m drivers on its books, which in total offer more than 30m rides a day. Didi’s safety issues, however, cut to the core of the operating model of the ride-sharing industry – and it goes beyond any single company or market.
The two murders by Didi drivers this year “struck an emotional chord in the country,” says Jeffrey Towson, professor of investment at Beijing University. “It became very important both for the country and for Didi to do something in the wake of this.” The company responded quickly with a raft of measures. President Jean Liu and founder and CEO Cheng Wei issued a lengthy apology, stating “our ignorance and pride led to irreversible pain and loss”.
The Hitch platform used by Zhao was taken offline, and the head of Hitch and another top executive were fired. In early September, Didi suspended all late-night ride hailing services for a week, a move that was estimated to have cost the company over 870 million yuan ($128 million) in revenue. The in-app panic button was upgraded with a direct link to police, and riders were prompted to provide emergency contact details and offered the chance to share their itineraries with up to six contacts.
At the same time, in-house customer service was being increased, with the company announcing recently it is now seeking to employ more than 1,000 communist party members to act as ‘role models’. Finally, it announced that all in-car conversations would be recorded and held on Didi’s servers for a week.
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But will the measures really work? “The creed of growth and market capture compromises so many other aspects of what a responsible company should be like,” says Chen Yujie, lecturer in digital media and communication at the University of Leicester. “In many senses, tech companies just have no idea how much power they possess, and therefore how much responsibility they should have.”
Despite ride-sharing being statistically safer than other forms of transport, the reputations of ride-sharing companies can easily be damaged by scandals. As statistics from China’s Supreme Court show, the crime incidence per 10,000 ride-hailing drivers stood at 0.048, while the number was 0.627 for taxi drivers.
At stake is not just the need to lower the number of crimes committed by drivers. What’s often overlooked is the fact that ride-sharing has also made drivers much safer. Taxi driving has rarely been a safe job, with drivers often riding late at night and known to be carrying cash.
In the USA between 2006 and 2012 the occupational fatal injury rate (which includes homicides) was much higher for taxi drivers and chauffeurs than the average American worker, according to data gathered by the Bureau of Labor Statistics (BLS). By digitising payments and forcing passengers to register before they use the service, ride-sharing is noticeably safer for drivers. Didi’s new policy of recording all in-car conversations had an unexpected side effect: in-vehicle conflicts have dropped 48 per cent within just a month of its launch.
Before Didi, China’s licensed taxis were competing with a vibrant market of unregulated ‘gypsy’ or ‘hei-che’ cabs. According to one study, the number of unregulated taxis in Beijing prior to 2012 was estimated as being 40 per cent greater than that of licensed cabs. Didi centralised these unregulated services, making them easier to control and guarantee prices, though Chen is quick to point out that the workers on Didi’s platform are still considered informal in the sense that a majority of them do not have labour contracts, which protect workers under China’s Labor Contract Law.
The launch of Didi effectively eliminated unregulated cabs across China. In the wake of the night-time service black-out in September, a popular article, The first night without Didi spread through Chinese social media. It painted a bleak picture of people stranded in cities at night, with unregulated cars making a comeback to serve them.
“They were everywhere,” says Fan Bing, a driver in the South-Western city of Chengdu, the capital of Sichuan province. Fan registered as a Didi driver in the early days of the service in 2015 and took to driving full-time in the past year. “The black-out affected everyone. I think it’s a bit much – if a doctor hurts someone, you don’t shut the hospital, right?” he says.
Didi’s blackout and the immediate re-emergence of unregulated cars showed the extent to which Didi holds a monopoly position in China. To put it in perspective: Didi had nearly 69m monthly users in 2017 – the nearest competitor, Yidao Yongche, managed just over two million. “This is where the Chinese government is also negligent,” notes Tu Le, managing director of auto advisory Sino Auto Insights. “They talk out of both sides of their mouth. The government wants national champions and to point to examples of innovation, so they let companies cut corners.” This, he argues, has both allowed Didi to grow to the extent that it had, and also to not heed warnings.
But Didi’s monopoly may be tenuous. Tu Le says the Chinese market is uniquely price-sensitive and a number of other companies – including Meituan Dianping, which already controls more than 59 per cent of the food delivery market – have started their own services and are making in-roads into Didi’s market-share. “It also depends on how you define the market,” Towson adds. “If its mobility, then yes Didi is a pretty unassailable monopoly. But if we’re talking about a digital service, which I think Didi clearly is, then it is a question of who has the customers and the data, which means companies like Alibaba or Tencent or C-Trip could easily enter the market.”
Didi is clearly aware of this, and its recent pivot towards safety – it has repeatedly stressed that from now on it will prioritise safety over growth – is a clear attempt to not only correct the reputational damage that the platform has suffered, but also to carve a position for itself as a company that understands the outsised role it plays in contemporary life.
“We’re not an e-commerce company; we don’t ship goods or food,” says a Didi spokesperson. “We put strangers in cars and send them to all parts of the city … it is a lot of responsibility.” It’s even more complicated in markets away from China with significantly higher crime rates, such as Brazil, where Didi has bought and operates the ride-sharing company 99, or the US where riders and drivers are, in some states, legally allowed to carry guns in the car.
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As the company goes forward and pushes into more global markets, safety could be a competitive advantage. In China, Didi outmaneuvered Uber – forcing its American to burn upwards of a billion dollars a year before finally throwing in the towel and selling its China business and a stake in its global operation to Didi. Globally, Uber has struggled with many of the same safety issues that Didi has; with sexual assaults in India causing the service to be temporarily suspended in Delhi, and reports in the US suggesting that over 100 drivers have been accused of sexual assault, with the company forcing women to settle claims discretely through arbitration as part of their terms of service.
Didi has been tacking its sexual assault complaints head-on. Didi’s founder, Cheng Wei, recently stated in an email to investors that Didi was “by no means an evil company,” and in the wake of its recent scandals publicly apologised. Uber, under the helm of Travis Kalanick, didn’t really address many of the allegations of assault. New CEO Dara Khosrowshahi has made efforts to rehabilitate the company’s image, it still seems to suffer from the lingering aftertaste of the kind of Silicon Valley tech-bro culture that saw a board-member forced to step down after making sexist remarks during an all-staff meeting aimed at addressing sexism within the company.
The ‘move fast and break things’ mentality that has fueled Uber’s rise globally is not a corporate culture that chimes well in China. It’s telling that rather than try and break the existing taxi-industry in China, Didi built its platform by first co-opting existing taxi-drivers onto the service, offering licensed taxi-drivers subsidies to drive for the service, before then branching out to offer ride-sharing and private cars.
The differences between Uber and Didi may be down to the different regulatory environments and strictures of working in a socialist-market economy, or they may be due to deeper differences in corporate cultures in Silicon Valley and Beijing or the impact of having a female president. As Didi starts operating in more international markets that once again bring it into direct competition with Uber – it started operating in Japan in September – the differences will likely become even more visible.
“Ride-sharing companies are currently conflating trust and safety. What makes people trust a product or service is different from what keeps them safe in the car,” argues Rachel Botsman, author of Who Can You Trust? Didi is clearly working overtime to send the right signals to its users and to ensure that consumer confidence is not dented, especially as there are growing rumors that suggest an IPO in 2019. It remains to be seen if the measures put in place are enough to assuage customer concerns; Didi declined to share recent data for the number of users on its service in the wake of the blackout.
Didi says it has the largest facial recognition network scanning drivers throughout the day to ensure the person at the wheel is the person logged into the app, and that its selection process is so strict that over 40,000 people a day fail to meet their criteria to become drivers. But even with all the best intentions in the world, no ride-sharing service will be able to guarantee 100 per cent safety. As Fan Bing, the driver in Chengdu notes, that’s impossible. “There are over 30 million of us driving – it’s unlikely that there won’t be one bad person who slips through the system. It’s an educational thing. Ultimately, some people just don’t know how to be human.”
This article was originally published by WIRED UK
