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Baidu and Sohu Stock Sink With Further Internet Crackdown in China

Shares of Baidu dropped more than 4 percent in late afternoon trading and Sohu was trading down more than 6 percent in New York.

Shirley Tian
    Jan 03, 2019 12:35 PM  PT
Baidu and Sohu Stock Sink With Further Internet Crackdown in China

China has ordered two of the country's biggest search engines, Baidu Inc. (Nasdaq: BIDU) and Sohu.com Ltd. (Nasdaq: SOHU) to shut several popular news channels from Jan. 3 to Jan. 10 while the companies clean out undesirable "vulgar" content.

As part of a resurgent effort to clean up online content, the Cyberspace Administration of China announced on Thursday that it was starting a six-month effort to eradicate vulgar information from a plethora of online media, including messaging services and livestreaming platforms.  

The cyberspace police also summoned senior executives from both Baidu and Sohu and ordered several of their news and content feeds to suspend updates for a week, according to Bloomberg. 

In response, shares of Baidu dropped more than 4 percent in late afternoon trading and Sohu was trading down more than 6 percent at $16.72 per American depositary share in New York. 

Regulators in Beijing periodically go after media companies to clean "illegal internet information." The CAC will "severely investigate and close a number of illegal websites and accounts, effectively curbing harmful information," according to the statement.

For Baidu and Sohu, the regulators said "everything from pornography and gambling to vulgarity and spreading unhealthy lifestyles will be shut down."

Immediately after the regulator's announcement, Sohu and Baidu both posted a similar comment on their official social media. "The company will strictly comply CAC's requirements, run all news channels in accordance with the law, fulfill company's social responsibilities and strengthen the ecological governance of the internet," Baidu said. 

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