What happened: Chinese artificial intelligence company iFlytek Co has shut down operations at one of its research and development centers in East China’s Anhui Province after state media CCTV claimed that the location of the center violates nature reserve regulations.
Why it’s important: In order to achieve an industrial upgrade, China has been giving lots of support to high-tech startups. Obtaining the high-tech status can give companies financial benefits that include tax cuts and government investment as well as policy supports such as an advantage in getting land from the government for industrial parks or research centers. Some online articles claim that iFlytek takes advantage of the preferential policies in obtaining land. Instead of using the cheap land for its core business, IFlyTek is being accused of pursuing real estate development, which is a much easier way to monetize. The company rebuked the accusations shortly after the scandal. iFlytek senior vice president Jiang says “Not a penny of our revenue comes from real estate investment.” This news comes shortly after another scandal about iFlytek’s faking of AI translations results.