2020-09-14

New Regulations Block OTT Streaming Services – iQiyi Now a Cross-border Service

Taiwan's Ministry of Economic Affairs (MOEA) has announced new regulations for the prohibition of illegal Chinese-funded OTT operations in Taiwan on 3 September.  The National Communications Commission (NCC) stated that consumers can still watch videos without the need to circumvent the firewall.  However, because relevant telecommunications and distributors cannot cooperate with Chinese-funded OTT operations, the viewing quality of videos may be affected, and subsequent consuming behavior will be deemed to be "cross-border consumption".

On 3 September, MOEA announced the "List of the Prohibited Commercial Engagement Practices in the Taiwan Area", which prohibits Taiwanese companies from acting as agents for Chinese OTT services.  The goal of this is to prevent Chinese OTTs, such as iQiyi, from operating illegally in Taiwan through agents or distributors.  This means that OTT platform services with "Chinese-funded" backgrounds are no longer able to operate legally in Taiwan .

NCC stated that after these new regulations are announced, the telecom operators, ISP operators, iQiyi distributors in Taiwan (OTT Entertainment, LTD.) and other operators will be banned from acting as advertising or related businesses agents.

NCC also advised that iQiyi's Internet server is in Hong Kong, and Taiwan consumers can still watch iQiyic using a cross-border service.  NCC will not block the iQiyic platform; instead, consumers can use the iQiyi platform with a cross-border service and without any need to circumvent the firewall.  The goal of these regulations is to restrict Taiwan companies from continuing to operate as agents, and to prevent customer service operations from being outsourced.

In addition, NCC stated that the Taiwan Government does not want the OTT platform with Chinese-funded backgrounds to expand their business in Taiwan, as such expansion could lead to a replacement of the domestic OTT platform operators.  Taiwanese companies will be required to conduct "self-censorship” with regards to speech when conducting their businesses on Chinese OTT platforms, and this is something that the Taiwan Government regards as undesirable.
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