Taiwan has decided to ban iQiyi (IQ) and Tencent (TCEHY) from operating streaming video services in their area. It is one of the latest moves of the government against Chinese tech companies.
Banning of Chinese streaming services
iQiyi and Tencent Video have been operating in Taiwan illegally. Both companies teamed up with Taiwanese broadcasters and distributors in order to get their content through the streaming services. This was discovered by the government and was placed in the notice that was published on August 18.
To end the illegal activity, Taiwan's National Communications Commission announced new rules that would prevent Taiwanese people and companies from providing services to mainland Chinese streaming operators and distributing their content, as stated in the notice.
The decision of the regulator is provisional, pending a 14-day public comment period. On September 3, the ban will take effect. Tencent declined to comment on the new rule, and iQiyi did not immediately respond to questions from the media.
Although Beijing continues to view Taiwan as a part of its territory, Taiwan continues to identify itself as a self-governing democracy.
Taiwan has a population of 24 million people, so the damage to the Chinese companies will not be as severe. However, the ban is evidence of the growing backlash against China's tech companies in global markets, as reported by Variety.
The relationship between Taiwan and mainland China have been having issues since Taiwanese President Tsai Ing-wen was elected in 2016. The Chinese government sees the Taiwanese president as someone who is in favor of the independence of Taiwan.
Washington has also moved closer to Taiwan. US Secretary of Health and Human Services Alex Azar visited Taiwan last week to convey President Donald Trump's support for the democratic island.
Chinese companies vs. the world
Taiwan is also now in the middle of the ongoing tech war between China and the United States, as numerous countries are becoming dependent on TSMC, a Taiwanese company, for advanced semiconductors.
Tencent Video and iQiyi have services that are just like Netflix. The companies allow streaming of licensed videos, and they also create and produce original shows that are very popular with the Chinese audiences.
According to the reports of their earnings last week, Tencent stated that its video service had 114 million subscribers, and iQiyi reported nearly 105 million. The majority of their subscribers are in mainland China.
Earlier this month, President Trump threatened to ban Tencent's popular messaging app WeChat and TikTok, a video sharing platform owned by ByteDance. Last week, Trump ordered ByteDance to divest interest in TikTok's US operations within the next three months, as reported by The Verge.
This week, the Trump administration further restricted Huawei's access to advanced semiconductors. According to analysts, this is a lethal blow to Huawei as it will affect their smartphone and telecommunications equipment.
British officials last month cited the disruption to Huawei's supply chain as a key reason it banned the company from the UK's 5G network, as reported by BBC.
Meanwhile, the Indian government in the past few months has banned TikTok and WeChat, as well as other popular Chinese apps. Government officials usually cite national security concerns for the restrictions, but companies such as ByteDance and Huawei have denied that their apps pose a national security threat.
Chinese companies that are listed on global markets are being monitored by financial regulators. US regulators are probing iQiyi after a short-seller in April accused the company of overstating its subscriber numbers and revenue.
iQiyi pushed back on the allegations, asserting in an official statement that the report contains "numerous errors, unsubstantiated statements and misleading conclusions and interpretations."
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