Issues cease and desist to 25 Web sites
Last modified on Friday, 21 March 2008 14:12
News reports have recently announced that the Peoples Republic of China (PRC) has surpassed the United States with having the most Internet users in the world (about 210 million users). Due to its huge population the PRC has a massive potential for Internet marketing, product advertising and Web services, which venture capital firms have been eager to tap.
However, the PRC is not like countries where their governments allow free access to the World Wide Web and its vast types of content. The citizens of the PRC have their content regularly censored and monitored by their government, particularly with regard to any type of content that might encourage political discontent. China just announced its ‘blacklist’ of 25 video Web sharing sites and ordered these sites to cease operations in China immediately; the government says they must cease due to the content of these sites as being ‘violent, raising political dissent and containing pornographic content.’ The government also sent warnings to dozens of other Web content sharing sites in an attempt to keep the lid on what its citizens are reading, seeing and hearing.
In their eagerness to enter the vast open market space in China some international venture capital firms may get burned. VC firms such as IDG, Sequoia and Steamboat Ventures rushed into the China Internet market in hopes of discovering the next “You Tube” and cashing in. Among the sites receiving a warning was Tudou.com, a site back by a unit of VC IDG. Tudor’s Web site indicates that it users publish more than 40,000 new videos per day. That is a lot of potential advertising dollars.
The Chinese government’s heavy handed tactics have the potential to frighten away foreign investors who do not want their investment tied up in the middle of a battle with Beijing officials. Beijing announced at the end of 2007 that it would allow only state-owned or state-controlled companies to apply for licenses to broadcast or stream video online. Some investors have anonymously complained that the industry has not been given clear definitions of the government’s standards, or an indication of how strictly the standards would be enforced.
Some industry watchers are saying that the clamp down by Beijing signals a move to “standardize video content,” and other predict that the government will issue a ‘white list’ of officially approved (and sanitized) Web sites, which foreign investors can safely invest in.
With the 2008 Olympics approaching in September in Beijing and presenting a prime opportunity for overseas investment and interest in China’s economy and industries Beijing cannot afford to offend prominent foreign investors and visitors with such heavy-handed censorship tactics.