The Chinese Government Eyes 1% Stake In Tencent, Baidu, NetEase

The Chinese government might soon own a 1% stake in major tech companies such as Tencent Holdings Ltd., Baidu Inc., and NetEase Inc., according to anonymous sources who spoke to the Wall Street Journal.

The 1% stake is part of a proposal around content distribution and censorship, which is still being discussed internally. According to Bloomberg, the proposal gives government representatives board seats and stakes of at least 1 percent at major internet portals in exchange for news licenses. Under the proposal, these news licenses would be mandatory for all providers and distributors of “current affairs news,” which includes politics, economics, military, foreign affairs, and social issues.

Chinese tech companies, such as Tencent and Baidu, already comply with government regulations around content censorship, filtering out sensitive keywords, rumors, and what the government deems ‘gossip’. However, this new proposal is an aggressive reassertion of government oversight. If implemented, government officials would have even tighter control over online content, proactively blocking and monitoring content before it’s published.

Though the Cyberspace Administration of China (CAC) and the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) regulate online media in China, “illegal” articles occasionally slip through, albeit temporarily. In March, Beijing-based Caixin Media Company published an article on free speech, featuring Jiang Hong, a member of the Chinese People’s Political Consultative Conference. A few days later, the CAC ordered the removal of the article, according to Caixin.

This proposal is the latest in a series of tightening regulations around content by the Chinese government. April was particularly eventful, as iTunes Movies and iBooks were blocked in China and online video celebrity Papi Jiang, whose latest video ad auction raised 22 million RMB (about $3.4 million USD), apologized publicly on Weibo after several of her videos were removed due to her use of curse words. These incidents align closely with a speech recently delivered by Xi Jinping at a symposium on cybersecurity , in which the President of China called for a more “clean” and “righteous” cyberspace.

Image Credit: Michel Temer