If you can react to the kick then shield isn't really a bad option and you might be able to punish if it's not spaced properly. Of course this is risky because of the command grab. Generally Diddy is going to use this tool to condition you and the smartest players will not throw it out senselessly, so the best universal option to beat side b is spot dodge or sidestep. You have to just be ready to react to it. Of course, there's nothing you can do if you get combo'd into it by Bair or your poor landing gets caught, but dealing with it in the neutral is just about practice.
In addition to learning how to spot dodge on reaction to Diddy's side b, you should learn how to deal with banana. Learn to play defensively and patiently when Diddy has the banana because doing something unsafe on his shield means damage or death. I can see that you main Cloud and for this particular matchup I'm guessing baiting an approach with limit charge and focusing on retreating Nairs is a good idea. Nair is huge and safe when retreating, and the air is just generally a good place to be when Diddy has a banana since you can't trip. Going for dash attacks isn't a bad idea because if you think Diddy is going to toss the banana you can catch it, though the counterplay to this is shield which will be bad for you. In the event that you do aquire the banana you have some good options. Banana into usmash/dsmash as well as any of your limit specials is true.
Did I get it right
Sonicninja115
? On a side note I think this thread could use an anti Diddy guide now that Diddy is once again the number one top tier and is growing in tournament popularity.