Data as an emerging factor of production is changing the global economic development model and reshaping the business model of enterprises, and at the same time, it has gradually produced a new series of ethical issues, that is, data ethics issues.

On July 2, 2021, the National Internet Information Office issued an announcement stating that it will conduct a cybersecurity review of DiDi and require DiDi to stop new user registration during the review period. In the following days, the National Internet Information Office has issued a series of notifications to DiDi. It is foreseeable that the cybersecurity review of a series of overseas listed Internet platform companies, such as DiDi ,will have a profound impact on corporate data ethical governance and data security supervision, and will have a landmark change-orientation significance.

National Internet Information Office announcement of cybersecurity review of DiDi

To this end, based on the case of  DiDi, Professor HAN Hongling of Zhejiang University, PhD student CHEN Shuaidi of Zhejiang University, Professor LIU Jie of Guizhou University of Finance and Economics, and Professor CHEN Hanwen  (corresponding author) of Nanjing Audit University have conducted preliminary research on the underlying data ethics issues under DiDi’s business model and the basic relationship between data ethics, data security and national security, and published Data Ethics, National Security and Overseas Listings: Based on DiDi’s Cases Research article.

The article was first published in the 15th issue of Finance and Accounting Monthly in 2021. As of the press date, the article has been read over 28,000 times on the Finance and Accounting Monthly Wechat public account, ranking second in the history of the official account. In addition, this article has been reprinted by various platforms and media, such as Baidu, Sina, Manager Magazine, and Internet Economic Service Platform.

Data Ethics, National Security and Overseas Listings: Based on DiDi’s Cases in Finance and Accounting Monthly

The authors point out in the article that DiDi is a typical digital platform company driven by data intelligence. Its business model is led by data thinking, based on data assets, and centered on data technology. As an Internet platform, DiDi has obtained a large amount of transaction data and operational data. DiDi processes, analyzes and mines the massive amounts of data it acquires to make the data “intelligent”, developing existing businesses and open up new business segments through “intelligent” data. In DiDi’s intelligence-driven business model, an intelligent system that integrates algorithms, rules, and data has caused DiDi’s data ethics issues in areas such as illegal collection and abuse of data, price discrimination, and abuse of market position, and generated data ethics based on a series of new data security risks in data processing.

In essence, data security risks stem from data ethics issues. As trends such as the cross-border flow of data from overseas listings become more common, data security risks have transformed into a form of interest related to national security. In the context of the promulgation of the "Holding Foreign Companies Accountable Act" in the United States, this type of China concept stocks company with massive amounts of data represented by DiDi will face more severe survival challenges. In addition, this type of enterprise must also consider data security and national security risks based on transborder flows of data.

The research shows that data ethics issues of digital platform companies are the underlying incentive for cybersecurity review, while data sovereignty is the direct cause for such review. In the context of the US’s promulgation of the "Holding Foreign Companies Accountable Act", in order to reduce overseas listings for the national security risks that may be caused by the cross-border flow of corporate data, it is necessary for countrys regulatory authorities to set up reasonable pre-approval procedures, long-arm jurisdiction rules, and cross-border data supervision cooperation.

The aim of the research is to promote academics and regulatory authorities to pay attention to, and to explore the emerging economic phenomenon and academic propositions that specific business models may conceal specific ethical issues. And the research also wants to point out that the basic concept of value creation that ethics is the essential source of sustainable competitive advantage should be established and upheld.

Source: CHEN Shuaidi, PhD Student, ZJU-SOM