China's Tencent acquires 12% stake in Snap as shares plunge

Snap Inc said on Wednesday that Chinese tech and media investment firm Tencent Holdings Ltd had taken a 12 per cent stake in the company, a day after the owner of disappearing-messaging app Snapchat was punished by Wall Street for disappointing quarterly results.

Snap's shares fell 16 per cent to $12.67, well below their $17 initial public offering price in March, as investors fretted about Snap's slowing user growth in the latest quarter and viewed Tencent's move as an investment rather than the precursor to a merger.

"(Tencent) buys all sorts of minority investments, and I don't think we can extrapolate that this means they intend to take over the company," said Wedbush Securities analyst Michael Pachter.

Snap said it had only received the details of the stake from Tencent this month. Tencent's 145.8 million class A common shares of Snap, worth about $1.7 billion at Wednesday's price, give the Chinese company no voting rights.

Tencent president Martin Lau told Snap his firm is "excited" to deepen its relationship with the firm, Snap said in a regulatory filing. A Snap spokesman declined to comment further.

The Chinese tech company, which owns mobile chat service WeChat, has bought stakes in several companies over the past few years, including electric car maker Tesla Inc and ride services company Lyft Inc. In 2013 it invested in Snap through an affiliate.
READ MORE

China censors entertainment news outlets, cites 'socialist values'

Major social media platform operators including Weibo, WeChat, Youku, Baidu and Netease shut down a large number of social media entertainment news outlets after a June 7 meeting with Beijing's Office of Cyberspace Affairs.

The crackdown has been justified under China's newly implemented Cybersecurity Law, which emphasises ideological control as a core component of maintaining state security.

More than 60 outlets have been shuttered in less than a week, some of which are commercial news outlets funded by private capital investments, while others are entertainment sections of newspapers such as “Entertainment weekly of Southern Metropolis”. Other examples include “Care about gossip association”, which has a market value of up to RMB 100 million (approximately US $15 million) and “Movie Lambaste” with a market value of up to RMB 300 millions (approximately US $40 million dollars).

According to a report from state-run Xinhua news, Beijing's Office of Cyberspace Affairs cited China's Cybersecurity Law, enacted on June 1 2017, as impetus for the crackdown. They implored content platform operators to enforce the law:

Individuals and organisations cannot infringe on other people’s reputation, privacy, intellectual properties and other rights using the Internet. Operators should reinforce the management of their users and the distribution of user content. Once [the operators] find that information has violated related laws and administrative rules, they have to stop transmitting the information, eliminate the sources and prevent the information from spreading. The record should be preserved and reported back to the authorities.

China’s Cybersecurity Law went into effect despite deep concerns about the powers that it gives to law enforcement to obtain sensitive information, including encryption keys, from network operators. The law has also triggered major concerns among foreign companies, over its requirement that local data be stored within China.
READ MORE

Social media curbs in China: From June, you will need a permit to post news

China’s State Council Information Office released updated regulations on 2 May that will restrict individuals from writing and reading news stories from individual blogs and social media, including Sina Weibo and WeChat. Under the news rules, users will be required to obtain a permit before writing or distributing news on social media.

The updated version of the “Provisions for the Administration of Internet News Information Service” will take effect on June 1, 2017.

Along with restrictions on news reporting, the rules will also require individuals to submit real identity information when subscribing to a news information service.

The original provisions were introduced in September 2005 to restrict online news outlets from writing and publishing original news stories from “illegitimate” sources, in an effort to force all online portals to distribute news only from news agencies licensed by Internet News Information Service Work Units.

Despite the many layers of censorship that China is so well known for, the digital media environment has given rise to a robust industry of individuals doing serious news reporting online. The country's various social media platforms have enabled more and more independent writers to use blogs, Weibo and WeChat public platforms to write news features or news commentary. Some independent journalists or commercial media outlets have even managed to support their work with readers’ cash tips and commercial ads.
READ MORE