Short-video giants fined in China for ‘promoting excessive consumption’

By Elles Houweling

Chinese short-video social media platforms Douyin and Kuaishou were both fined 200,000 yuan (US$ 31,300) for publishing advertisements promoting controversial microloans that encouraged “excessive consumption,” according to a report from the Beijing Haidian District Market Supervision and Administration Bureau.

Douyin, the Chinese equivalent of TikTok, and its domestic rival Kuaishou were handed the fines on October 11 by a branch of the State Administration for Market Regulation (SAMR), the country’s primary market watchdog.

The penalty was issued under the 2008 “Advertising Law of the People’s Republic of China”, which, among other things, stipulates that commercials shall not “obstruct public order or disturb a healthy social climate”.

The companies were fined for a video showing a migrant worker inside an aeroplane with his mother. Worried about his parent who is airsick, the man takes out an instant loan of 150,000 yuan (US$23,500) via the JD Finance app to get her an upgraded cabin seat.

The campaign was produced by JD Technology, the financial technology arm of ecommerce giant JD.com, and initially went viral last year. At the time, it was criticised for being insensitive to migrant workers and JD was fined 400,000 yuan (US$62,600) for the commercial.

In November 2020, the video was released on Kuaishou. The following month, Douyin also published the commercial. In both cases it attracted widespread criticism.

In addition to fining the two social media platforms, SAMR also confiscated revenue of 39,400 yuan (US$6,160) from Douyin and 74,200 yuan (US$11,580) from Kuaishou. The market watchdog described the companies’ behaviour as having “serious value problems that promoted incorrect orientation, such as excessive consumption.”

Kuaishou and Douyin did not immediately respond to Verdict’s request to comment.

This was not the first time that the two social media platforms were fined for inappropriate advertising content.

In August, Kuaishou was handed a 22,500 yuan (US$3,500) fine for promoting off-campus tutoring services and bubble tea chain shops that offered misleading promises. Douyin was slapped with a 30,000 yuan (US$4,700) penalty in July for overstating the app’s popularity.

In addition to broadcasting financial advertisements, Kuaishou and Douyin are also actively deploying their own online financial services. In 2020, Kuaishou acquired the online payment platform Easylink Payment, also known as Payeco, for 300m yuan (US$45.6m).

Douyin launched its own payment function – Douyin Pay – in January 2021.

Rolling out in-house payment platforms is a natural step for both companies aiming to expand their ecommerce businesses. The individual apps are meant to compete with Tencent’s WeChat Pay and Alibaba’s Alipay, which combined still control 90% of China’s online payment ecosystem.

Earlier this year, Chinese regulators urged big tech firms to terminate monopolistic practices in China’s online payment ecosystem or face penalties. Soon after, Alibaba opened up its so-called walled-gardens, allowing consumers to checkout using the WeChat Pay app.

The action taken by SAMR against Douyin and Kuaishou falls in line with Beijing’s effort to strengthen control over China’s cyberspace, which includes the shaping of ideology, culture and societal values.

Accordingly, the country’s main internet watchdog, the Cyberspace Administration of China, published guidelines last month to further regulate “unhealthy” online content. Following the document’s release, prominent social media platforms, including WeChat and Weibo, deleted thousands of independent financial news accounts.

Under the new guidelines, social media platforms are urged to ramp up their self-censorship capabilities and moderate the content generated by their users to foster a “clean and healthy” cyberspace. This includes the deletion of financial news deemed false or harmful to society.