In China, This is Social Media’s Biggest Enemy

The future of Chinese Internet and media companies has grown more dubious recently. China’s top legislature recently passed a controversial law that tightens government control of the Internet. The state will require web users to register for Internet access with their real names, and is authorized to delete posts or pages that contain information that the state finds unsavory. And now, a state-run news agency has filed for an initial public offering.

How will this affect Chinese Internet and media companies?sina-weibo-logo

Shares of SINA Corporation (NASDAQ:SINA) have been sensitive to the regulatory environment in China. Sina runs one of the country’s most popular micro-blogging platforms, and was previously subject to policies asking that it obtain the real identify of its users as a condition for registering or posting.

The new legislation seems to take some of the burden of compliance off Sina’s shoulders, but the policies of the country’s new leadership could still put the breaks on growth. Along with other Chinese Internet and media companies, Sina, which was previously concerned that the cost of compliance would include a drop in user traffic, could face larger and more worrisome problems. The Washington Post reports that in the wake of the new legislation, the weibo accounts for journalists and activists who spoke out against the ruling party were disabled.

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