Short video group Kuaishou shed billions of dollars in market value after Chinese state media called for more regulation of the sector, in the latest warning to the country’s technology companies amid a regulatory assault.
The commentary in Chinese Communist party mouthpiece People’s Daily on Friday accused online video platforms of negatively influencing the nation’s youth, who have flocked to stars boosted by short video platforms run by Kuaishou and rival ByteDance.
Shares in Kuaishou fell as much as 11.8 per cent in morning trading in Hong Kong before paring losses to be down 5.8 per cent. That came on top of a record drop of 15.3 per cent on Thursday after a post-initial public offering lock-up of its shares expired and Kuaishou announced it would shut down its US-focused short video app that competed with Bytedance’s TikTok.
Shares in Kuaishou, which was valued at $160bn following its February IPO, have been hit by Beijing’s clampdown on China’s Big Tech groups. Its market capitalisation has dropped $65bn since the start of July to less than $45bn.
People’s Daily said online platforms’ algorithms had encouraged fans to send payments to support internet idols. “Some minors have been induced [to] participate in such fundraising and have even been involved in illegal cases,” it wrote.
“Analysing the emergence of this ‘bad fan culture’ phenomenon, we find that certain online platforms have played a role in . . . fanning the flames”, the article added, without naming any companies.
The scrutiny of China’s short video platforms came amid a broadening assault on the country’s tech ecosystem, which has intensified in recent weeks as regulators have sought to exert greater control over company operations and where they sold shares.
The broadside from the party newspaper against “bad fan culture” also followed an outpouring of online support from fans of Kris Wu, a Canadian-Chinese singer who was detained in Beijing on Saturday on suspicion of rape. Wu has denied the allegations.
“This extreme idol chasing culture has challenged the bottom line of the law and morals many times,” China’s Central Commission for Discipline Inspection, the party’s top graft buster, said in a statement on its website on Thursday. It added that online fan culture needed to be cleaned up by “drawing a red line” and “standardising words and actions”.
The CCDI noted that China’s cyber regulators were expanding a campaign targeting “fan club” culture and would supervise websites and platforms to “compress the room for fans to irrationally chase idols”.
Much of the recent tech crackdown has focused on sectors Beijing views as having too much influence over China’s youth. Last month, authorities stunned investors by forcing companies that tutor students to reorganise on a non-profit basis, wiping billions of dollars from the market value of the sector’s biggest players.