At the end of 2007, China’s Ministry of Information Industry (MII) issued a law requiring online video sharing sites to have controlling interests owned by state enterprises. The law was put into effect on January 31, 2008. The rule upset the industry and venture capitalists as most online video sites in China are privately owned. However, MII issued a clarification on the new rule yesterday, providing some leeway for these companies. In an interview with the media cited on Chinese tech site 163.com, MII indicates that video sharing sites launched prior to the new rule’s publication will be able to re-register and continue operation. Pearl Research believes while the announcement protects the rights of existing sites, it also sets a significant barrier to entry for new players in the segment. In addition, it is unclear if further tightening will occur as the government continues to regulate the Internet.

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This story has been provided by our new research partner Pearl Research.