Taiwan to ban Chinese streaming services Tencent and iQiyi

Tencent Video and iQiyi have been “illegally” operating in Taiwan by collaborating with local broadcasters and distributors to deliver their video content via streaming services, according to a government official published Tuesday.

To stop this, the Taiwan National Communications Commission announced new rules that will prohibit Taiwanese individuals and companies from providing services to Chinese streaming operations and disseminating their content, according to the statement.

The regulator’s decision is pending a 14-day period for public comment. The rules are set to take effect on September 3rd. Tencent declined to comment, while iQiyi did not immediately respond to questions from CNN Business.

Taiwan is a self-governing democracy that continues to see Beijing as part of its territory. With a population of about 24 million people, the damage to Chinese companies will be limited. But the proposed ban is further evidence of the growing backlog against China’s tech champions in global markets.

Relations between Beijing and Taipei have been assassinated since the 2016 election of Taiwan’s president Tsai Ing-wen, who was seen by the Chinese government as a proponent of the island’s formal independence. Washington has also moved closer to Taiwan. The historic visit of the US Secretary of Health and Human Services Alex Azar last week was intended to convey the support of President Donald Trump for the democratic island.

Taipei also finds itself in an increasingly precarious position in the US-China tech war, as the world becomes increasingly dependent on the Taiwanese company TSMC for the most advanced semiconductors.

Tencent Video and iQiyi both offer services that are equal Netflix (NFLX). They stream licensed content, and also produce original television shows and films that have become popular with Mandarin-speaking audiences.

In earnings reports last week, Tencent said its video game had 114 million subscribers and iQiyi reported nearly 105 million. The vast majority of those subscribers are on mainland China, according to analysts.

Trump threatened earlier this month to ban Tencent’s popular messaging app WeChat and TikTok, the wildly popular video-sharing platform owned by China’s ByteDance. Trump last week also instructed ByteDance to distribute interest in TikTok’s U.S. operations within the next 90 days.

Earlier this week, the Trump administration further restricted Huawei’s access to advanced semiconductors, a motion analyst called a “deadly blow” to the Chinese tech company’s smartphone and telecommunications equipment business. British officials last month cited the restriction on Huawei’s supply chain as a major reason why the company banned the UK’s 5G network.

The Indian government has also banned TikTok and WeChat in recent months, as have dozens of other popular Chinese apps.

Government services often refer national security concerns to the restrictions, although companies such as Huawei and ByteDance have repeatedly denied that their apps pose a national security risk.

Financial regulators are also looking much closer at Chinese companies listed on global markets. U.S. regulators are investigating iQiyi after a short salesman in April accused the company of its subscriber numbers and revenue far too much. iQiyi shrugged back on the allegations at the time, claiming in a statement that “the report contains numerous errors, unconfirmed statements and misleading conclusions and interpretations.”

– Steven Jiang, Vanesse Chan and Ben Westcott have contributed to this report.

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