Beijing-based news and information content platform Jinri Toutiao, or Toutiao, apologized on Wednesday for not screening out vulgar content, with industry insiders warning that further crackdowns on vastly popular online platforms are likely to widen while Toutiao's future fundraising may also be affected.
Zhang Yiming, CEO of Toutiao, a flagship app developed by Beijing Bytedance Technology Co, said in a public letter that it would permanently remove its "Neihan Duanzi" - a joke-sharing app - due to the wrong direction the company has taken with it. "Our product was not in line with core socialist values…and we did a terrible job in guiding public opinion," Zhang said in the letter published on Wednesday morning.
The company has been partially chasing for rapid growth and a bigger market scale, while failing to help users grasp a "positive energy" and take on social responsibilities, the CEO noted.
Toutiao was listed by industry consultancy CB Insights as the rising tech start-up among 100 of the most promising private companies applying artificial intelligence (AI) algorithms in 2017. Toutiao was also most well-funded, as it had raised .1 billion so far, CB Insights said.
By using AI algorithms, Toutiao provides personalized news recommendations for users. However, this business model has caused trouble for the company, and Zhang said it will further enhance content examination by increasing the number of human content reviewers.
"The team for reviewing Toutiao's content will be expanded from current 6,000 to 10,000," he added.
China's State Administration of Radio and Television ordered Toutiao on Tuesday to shut down Neihan Duanzi for its vulgar content, which caused disgust among netizens, according to the website of authority.
Also on Wednesday, Toutiao's sister app Douyin, a short video-sharing app which is seen as a clone of its US counterpart Musical.ly, reportedly closed its live-streaming and comment sections for a thorough content examination, according to media reports.
"It's just the beginning of a full-scale cleanup of internet content in the country," Liu Dingding, a veteran industry analyst, told the Global Times on Wednesday. "AI is not omnipotent. US tech firms like YouTube all need to battle objectionable content, not to mention their Chinese companies who still lag behind in advanced algorithms," he said.
Chinese Twitter-like platform Weibo also released its monthly censorship report on Wednesday, with about 132,000 posts related to politics screened out or deleted due to harmful information, according to its official Weibo account. Meanwhile, about 1.39 million posts deemed to have been spreading obscene content have been removed.
The recent incident with Toutiao will have a further impact on its fundraising process, Liu said. "It will take time for the start-up to correct its wrongdoing," he said.
In Toutiao's latest D-round fundraising, it secured funds from venture capital and private equity firms such as Sequoia Capital and General Atlantic. However, Sequoia Capital did not comment on the media regulator's clampdown on Toutiao on Wednesday.
"For sure, it will cause problems for its [the company's] further fundraising, even a potential IPO," the analyst said.