Real-name system may shut down micoblogging in China

2012-05-03 - michelle


Source :China Times30 April 2012

Wang reported [Reporter Lu Sumei / roundup]

Sina weibo, China’s domestic twitter which has 300 million users, may under the threat of shutting down. According to Sina’s 2011 Annual report submitted to the U.S. Securities and Exchange Commission on 28 April, "the authorities required our users to use real name for authentication.. But for varies reasons we are unable to complete the task. We may face severe punishment by the Chinese government, including partial suspension of the microblogging’s function or even shutting it down." Sina reminded investors that if it was punished by the Chinese government, it might affect the company's share price.

Negative impact on stock price expected

"imeigu””, a mainland investor website, quoted the Risk of administration on micro-blog operation notice in the above-mentioned annual report, that the Beijing municipal government announced the "Beijing micro-blog development and management regulation” on 16 December 2011. It required microblogging users to submit their true identities to micro-blogging service providers. Microblogging service providers were required to verify the identity and information of users without affecting their microblogging users’ names. In addition, Beijing-based microblogging service providers are required to complete the provision before March 16 this year.

Sina pointed out that "Although we have tried our best, we cannot comply with the real-name authentication to all users. Reasons include difficulty in changing habits of existing users, nature of the product and the difficulty to comply witht". “If the the Government prefer to push it shortly, it may seriously reduce the number of our microblog users.” Sina also claimed that "we may breach the regulations which will lead to penalty in future. All these will lead to adverse effect on our stock price."

As Sina could not promise to increase the number of users and page views, neither ensure that the profit model (such as "monetization") of other microblogging or social network services providers would also apply to Sina weibo, Sina declared that "our share price may suffer negative impact significantly, Our stock price may drop and investors may lose part or all of their investment principal.”

Strict control increases operating costs

Sina weibo had to turn off the commentary function between 31 March to 3 April in order to stop online rumors about resignation of Bo Xilai, the former Party Secretary of Chongqing. Mainland’s media reported that Sina spent a lot to hire network administrators to monitor or remove inappropriate contents, so as to in line with the mainland‘s official requirements. Investors viewed that strict monitoring increased Sina’s operating costs, which led its share price plunged for nearly 10% in the U.S. Nasdaq stock market in a single week.

Sina's annual report once again pointed out the "real name authentication" dilemma faced by itself. Netizens left many comments, “Is there still freedom of speech?", “If real name registration is mandatory, closing down (weibo) is the only option", “I am sad for weibo, hope that I will not witness its death".

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