TikTok rival Kuaishou shares fall after state media calls for more durable regulation

Updates from Beijing Kuaishou Technology Co Ltd

Short video group Kuaishou lost billions of dollars in market value after Chinese state media called for tighter regulation of the sector in a recent warning to the country’s tech companies amid a regulatory attack.

The comment in the mouthpiece of the Chinese Communist Party’s People’s Daily on Friday accused online video platforms of negatively affecting the nation’s youth who flocked to stars supported by short video platforms from Kuaishou and rival ByteDance.

Kuaishou shares fell as much as 11.8 percent in morning trade in Hong Kong before reducing losses to 5.8 percent. That was on top of a record 15.3 percent decline Thursday after a post-IPO lock on its shares expired and Kuaishou announced it would close its US-targeted short video app that competed with Bytedance’s TikTok.

Kuaishou’s shares, valued at $ 160 billion after going public in February, have been hit by Beijing’s crackdown on China’s big tech groups. Market capitalization has dropped $ 65 billion since the beginning of July to below $ 45 billion.

People’s Daily said the online platforms’ algorithms encouraged fans to send payments in support of internet idols. “Some minors have been abducted [to] participate in such fundraising drives and have even been involved in illegal cases, ”it says.

“In analyzing how this ‘bad fan culture’ phenomenon came about, we find that certain online platforms played a role. . . fan the flames, ”added the article without naming any companies.

The review of China’s short video platforms came amid a widening attack on the country’s technology ecosystem that has worsened in recent weeks as regulators sought greater control over corporate activities and stock sales.

The broadside of the party’s “bad fan culture” newspaper also followed a flurry of online support from fans of Kris Wu, a Sino-Canadian singer who was jailed in Beijing on Saturday on suspicion of rape. Wu denies the allegations.

“This extreme idol-hunting culture has challenged the bottom line of law and morality many times,” China’s Central Disciplinary Inspection Commission, the party’s top graft buster, said in a statement on its website Thursday. It added that the online fan culture needs to be cleaned up by “drawing a red line” and “standardizing words and actions”.

The CCDI noted that China’s cyber regulators were expanding a campaign against “fan club” culture and monitoring websites and platforms to “narrow the space for fans to irrationally hunt for idols”.

Much of the recent tech crackdown has focused on sectors that Beijing sees as having too much of an impact on China’s youth. Last month, authorities stunned investors by forcing student-educating companies to reorganize on a nonprofit basis, removing billions of dollars from the market value of the biggest players in the sector.

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