Using China Mobile, Beijing hits portals hard

In yet another sign that Beijing is bearing down harder on Internet service companies and users, state-dominated China Mobile cut picture transmission services to top portal Sohu.com from September 1 for reportedly using its customer base for unsolicited marketing activities. The suspension, which does not take effect till September 1 but is set to last 12 months, denies Sohu the means to provide a highly popular value-added service. The delay and severity of the suspension suggest it may be a warning. China Mobile had struck out at Sohu competitor Sina.com, briefly suspending services that prevented the portal from offering interactive voice response services after it ran ads for phone sex services. Both portals are listed on the NASDAQ and the market is not taking the news well, proving that Beijing can exert draconian control on China's once relatively free and easy independently owned portals. Sohu shares lost nearly a fifth of their value on the news in one day before regaining some lost ground and ending only 10.7% down, finally closing Friday the 13th trading at US$14.92.