China publishes "blacklist" of video Web sites

By Sophie Taylor

SHANGHAI (Reuters) - Chinese authorities ordered 25 video-sharing Web sites to halt operations and issued warnings to dozens of others on Thursday, tightening their grip on online content in a move which could scare away future investment in the sector.

Among the Web sites to be warned was Tudou.com, which is backed by a unit of venture capital heavyweight IDG and received an official warning under new rules to curb pornographic, violent and political content.

Venture capital firms such as Sequoia, IDG and Steamboat Ventures have poured into the Internet sector in China -- by some estimates now the world's biggest Web market -- in search of the next YouTube, which was acquired by Google.

But Beijing said late last year that only state-owned or state-controlled companies can apply for licenses to broadcast or stream video online.

A lack of clarity over those definitions and uncertainty over how strictly they would be enforced has left the industry confused.

Tudou, one of China's most popular video sites whose service was temporarily suspended last week, said it had received an official warning before the statement came out on Thursday.

"We're working hard to upgrade our systems to catch everything that needs to be caught," Vice President Dan Brody said by phone from Taiwan.

Tudou's investors include Granite Global Ventures, IDG China and JAFCO, and its users publish more than 40,000 new videos each day, according to its Web site www.tudou.com .