Beijing’s Increasingly Hard-Line Approach to Online Content

Three is usually a crowd in the world of online dating, especially when the unwanted onlooker is the Chinese government.

Late last month, the Nasdaq-listed Chinese social media company Momo saw its popular Tantan dating app – China’s Tinder – pulled from online stores by order from Beijing.

While the company didn’t offer a reason for the sudden ban, analysts speculated that the app had been hijacked by services offering prostitution, which is illegal in China. “The content deemed inappropriate was generally pornographic in nature,” said Shi Jialong, China internet and new media analyst in the Hong Kong office of Nomura, a Japanese bank.

The Tantan ban is seen as part of Beijing’s increasingly hard-line approach to online content. The past year has seen a number of popular apps taken offline. Last year, regulators cracked down on video-sharing website Bilibili, live-streamer Douyu, interactive content platform Jinri Toutiao, information providers Phoenix News and NetEase News and Tencent-owned news app Tiantin Kuaibao.  

The latest move, in January 2019, tightened censorship of short-form videos, listing 100 categories of banned content including “smearing the image of Communist Party leaders” to “sexual moaning”. Short-form video sites like Douyin, which owns the globally popular TikTok, have more than 250 million users in China.

China’s government has a history of censoring computer-related leisure. “Around the early years of the 21st century, it was common to see or hear expressions such as ‘digital heroin’ and ‘contamination of spiritual civilisation’, warning people of dangerous game playing,” said Sara Liao, a Chinese University of Hong Kong assistant professor who has studied technology regulation in China.

But back then, internet usage was relatively low and online entertainment was a niche. Now, China has a huge digital economy and some of the world’s biggest gaming companies. However, even this sector is subject to abrupt changes in regulatory mood, as happened last year, when censors began cracking down on videogames, citing the physiological and psychological toll on users, especially children’s eyesight.

“The pause in gaming licences began to look political after the Ministry of Education proposed limiting [them] in response to President Xi Jinping’s public worries about the high rate of myopia in China,” said Xie Yanmei, an analyst with Gavekal Dragonomics, an investment research consultancy, in Beijing.

In November, the Beijing municipal government announced they had shut down 530,000 live streaming channels and 800,000 illegal accounts following the implementation of an August 2018 regulation that said all live streamers must use their real names when registering.

Tencent Holdings Limited, a company valued at more than US$500 billion,  has suffered the most from regulatory actions last year. Tencent is best known as the company that owns WeChat, the messaging and payments app. But its main source of revenue is video games, such as its homegrown League of Legends, and internationally famous titles like PlayerUnknown’s Battlegrounds and Fortnite, in which it has invested heavily.

Tencent made 40% of its US$46 billion revenue in 2018,but regulators did not approve any new games between March and December 2018. As a result, revenue growth for its smartphone games collapsed from 68% year-on-year in the first quarter of 2018 to 12% in the fourth quarter, and total profit growth for the year slowed to 10% from 75% in 2017.

“In order to have the punishment lifted, companies usually have to convince regulators that they can do better in self-regulating such user-generated content,” said Shi, adding that such bans rarely last more than a month.

When licensing of games resumed in December 2018, developers reacted cautiously, pushing “functional” and “educational” titles ahead of recreational or conflict-based games. Addressing Xi’s concerns over eyesight, Tencent even launched a video game designed for the visually impaired. The Shadow of the Sky game allows users, wearing headphones, to avoid flying missiles, which they then swipe away by judging the direction from the sound.

Some analysts believe China will be more hands-off, having given the internet companies enough warnings to affect their bottom line. “Regulatory concerns are gradually subsiding in China’s new-economy industries like gaming, as evidenced by the recent resumption of approvals for new video game titles,” said  Min Lan Tan, head of Asia-Pacific global wealth management at UBS, the Swiss bank.