Chinese game-streaming platform Douyu confirmed on Tuesday that its founder, Chen Shaojie, has been arrested by Chengdu police, marking the latest high-profile figure to face legal action in Beijing’s ongoing crackdown. Chen, who serves as the CEO and Chairman of Douyu International Holdings Ltd, was reportedly detained around 16 November 2023. The arrest follows growing scrutiny and reports of his disappearance earlier this month, with suspicions of a government probe into alleged gambling and pornography on Douyu’s platform.
Background on Douyu:
Backed by Chinese tech giant Tencent and valued at US$4 billion during its 2019 IPO, Douyu is among China’s largest game-streaming platforms, akin to Amazon-owned Twitch. However, the company’s market value has sharply declined to approximately US$300 million amid the broader regulatory crackdown on the tech sector by Chinese authorities.
Speculations and Investigations:
Numerous media outlets had previously reported Chen’s unexplained absence, linking it to a potential investigation into illicit activities on Douyu’s platform. Speculations pointed towards suspected gambling and pornography, contributing to the heightened regulatory scrutiny. The Beijing government has intensified efforts to enforce regulations and address perceived issues in the country’s online entertainment and technology sectors.
Impact on Douyu and Contingency Plans:
In a statement, Douyu expressed that it has not received official notice of the investigation against Chen or the reasons for his arrest. The company acknowledged the potential material adverse impact on its reputation, business, and results of operations due to Chen’s ongoing detention and any subsequent legal proceedings. Despite the challenges, Douyu reiterated its commitment to upholding regulatory compliance and maintaining normal business operations.
Broader Regulatory Environment:
Chen’s arrest aligns with the wider context of Beijing’s recent anti-graft campaign, targeting high-profile individuals and companies. The government’s intensified scrutiny on tech companies and regulatory enforcement has triggered significant market fluctuations and business challenges across various sectors.
Chen Shaojie’s arrest underscores the escalating regulatory pressures faced by tech companies in China, with the founder of Douyu becoming the latest casualty in Beijing’s crackdown. The broader implications on Douyu’s operations and the tech sector’s regulatory landscape highlight the complex challenges faced by companies navigating the evolving regulatory environment in China. Chen’s detention adds to the growing list of prominent figures facing legal actions, reflecting the government’s commitment to asserting control over the industry.