Caixin
Apr 11, 2020 08:41 PM

More Pain for Luckin Coffee as App Targeted in Privacy Sweep

Luckin Coffee Inc.’s mobile app is among more than 20 delivery, healthcare and e-learning apps threatened with removal from the country’s app stores after a rebuke from China’s cyber-security watchdog for infringing consumer data regulations, according to the state-run Xinhua News Agency.

Aside from the embattled coffee chain, shares of which are frozen on the Nasdaq pending an update on its admission it fabricated sales of 2.2 billion yuan ($310 million) last year, Pizza Hut, MissFresh, Meicai, YongHui SuperStores, Ping’an Good Doctor and more were found to have violated privacy rules by Tianjin’s National Computer Virus Emergency Response Center (CEVRC), a government agency under the State Council.

While the Friday announcement said the apps were to be removed from app stores, Caixin found those listed in the Xinhua report all remained available on Saturday afternoon.

Most were rebuked for not clearly or fully showing users their privacy agreements, and some failed to explain how they would use the personal information they collect, or to provide users with the option of changing or deleting that information or removing their accounts, CEVRC said.

MissFresh and Meicai blamed technical issues brought by app updates, and MissFresh told Caixin those were now resolved. Spring Rain Doctor said it had rectified the issue with an update Friday after the rebuke, but declined to comment further.

Luckin Coffee and SoftBank Group Corp.-backed pharmaceutical delivery service Dingdang Kuaiyao both declined to comment, while Ping’an Health and YongHui SuperStores did not respond by publication time.

CEVRC warned smartphone users to be careful when downloading and using apps to avoid having their personal information stolen. It recommended the use of real time antivirus monitoring apps.

The latest round of data privacy scrutiny appears to have targeted the online services sectors that saw the greatest user growth in the past quarter as people socially distanced or were forced into quarantine during the coronavirus crisis, including fresh food deliveries, healthcare, and remote learning.

Users spent an average of 96% more time on fresh food delivery apps in the two weeks after this year’s Lunar New Year holiday, which was extended to help arrest the spread of Covid-19, than for the same period last year, according to data provider Quest Mobile.

Online medical services and e-learning also rode a wave of strong user growth during the outbreak. One of the sanctioned apps was Ping’an Good Doctor, developed by Ping’an Group’s healthcare business unit, was among the first of its peers to see users surge in the week after Wuhan’s lockdown. The app, with more daily active users than any competitor, recorded a peak of 1.84 million active users on Jan. 26.

Online education platforms reported overall user growth of 22% and a 30% increase in engagement time year-on-year during the outbreak, as schools and training centers were forced to close.

Contact reporter Isabelle Li (liyi@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

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