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China technology

ByteDance fined by Chinese regulator over illegal medical advertisements

  • China has tightened control over online medical advertisements after a college student sought out an experimental treatment and died in 2016
PUBLISHED : Friday, 30 November, 2018, 12:34pm
UPDATED : Friday, 30 November, 2018, 4:28pm

A Chinese regulator has fined ByteDance, the world’s most valuable start-up, for publishing illegal medical advertisements in the news and short-video app operator’s latest brush with the government.

Beijing-based ByteDance, which runs news aggregation site Jinri Toutiao and video app Douyin (known as Tik Tok outside mainland China), was ordered to pay a total of 3.7 million yuan (US$533,000) in fines by a Beijing local commerce administration.

The latest fine of 3 million yuan was levied on November 19 over the company’s failure to submit ads for two health care products and one nonprescription drug for regulatory checks, and for failing to verify the content of the ads, according to China’s national Enterprise Credit Information Publicity System.

ByteDance needs to pay the fine within 15 days, according to the verdict. A Bytedance spokeswoman said the company had no comment.

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In March, Jinri Toutiao, which means “Today’s Headlines,” was fined 700,000 yuan and named and shamed by People’s Daily and China Central Television for posting online medial advertisements seen as misleading and harmful to the public.

The app had posted nine illegal medical advertisements about tooth and eye health treatments since June 2016, according to a March verdict.

Chinese regulators have been stepping up its control over online advertisement, from paid search advertisement, embedded links to emails and videos since July 2016 after a death of a college student who underwent an experimental cancer treatment which he found using China’s biggest Internet search engine Baidu.

The death triggered public outcry over online medial advertisement and prompted the government to tighten its control over the lucrative segment.

Nasdaq-listed Baidu was not fined because the ad posting was not considered illegal. The company has since tightened its oversight of medical ads and expanded into artificial intelligence-enabled businesses after government requirements to limit the amount of advertisements per page to less than 30 per cent.

The advertising fiasco led to a 13 per cent plunge in Baidu’s stock price in 2016, wiping US$6.9 billion off its market value.

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ByteDance is one of the world’s fastest-growing start-ups, thanks to its several hit apps.

Jinri Toutiao employs artificial intelligence to curate news for different readers with different interests. Douyin and Tik Tok has helped Bytedance broaden its user base by allowing users to watch and share short music videos with easy editing tools that can achieve fancy effects.

Tik Tok announced it reached 500 million global monthly active users in July. Last month, Tik Tok topped the social app category in number of new US downloads from both the Google Play and Apple App Store, beating Facebook, YouTube, Instagram and Snapchat, according to app researcher Apptopia. This happened after it merged with lip-synching app in August.

ByteDance’s rapid growth drew investors’ attention. Banks are lining up to lend up to US$1.5 billion to the company in hopes of being hired as underwriters for its upcoming IPO, The Wall Street Journal reported on Thursday. The start-up was said to be valued at more than US$70 billion after its latest fundraising round.