Our inability to fully comply with Audio-visual Program Provisions may expose us to administrative
sanctions, which would materially and adversely affect our business, results of operations and financial condition.
Pursuant to
the Administrative Provisions on Internet Audio-visual Program Service, or the Audio-visual Program Provisions, which was issued by the State Administration of Radio, Film and Television (the predecessor of GAPPRFT), or SARFT, and MIIT on
December 20, 2007 and came into effect on January 31, 2008 and was amended on August 28, 2015, online transmission of audio and video programs requires an Internet audio-visual program transmission license and online audio-visual
service providers must be either wholly state-owned or state-controlled. In a press conference jointly held by SARFT and MIIT to answer questions with respect to the Audio-visual Program Provisions in February 2008, SARFT and MIIT clarified that
online audio-visual service providers that had already been operating lawfully prior to the issuance of the Audio- visual Program Provisions may re-register and continue to operate without becoming state-owned
or controlled, provided that such providers have not engaged in any unlawful activities. This exemption will not be granted to online audio/video service providers established after the Audio-visual Program Provisions was issued.
Although we have been taking measures to ensure compliance, we may not be able to fully comply with Audio-visual Program Provisions. As a
result, we may face, according to Audio-visual Program Provisions, administrative sanctions including receiving a warning and be ordered to pay a fine of not more than RMB30,000. In the case of severe contravention, we may be ordered to cease
transmission of audio and video programs, be subject to a penalty equal to one to two times our total investment in the affected business and the devices we used for such operation may be confiscated. Furthermore, according to the Audio-visual
Program Provisions, the telecommunications administrative authorities may, based on written opinions of GAPPRFT, and in accordance with the relevant laws and regulations on supervision of telecommunications and Internet, close our platform, revoke
the license for the provision of Internet information services, or the ICP license, and order the relevant network operation entity which provides us signal access services to stop such provision of services. Such penalties would materially and
adversely affect our business, results of operations and financial condition.
If we fail to maintain our Internet news license, we may expose to
administrative sanctions, including an order to cease our Internet information services that provide news or to cease the Internet access services provided by third parties to us.
The PRC government regulates the Internet industry extensively, including foreign ownership of, and the licensing requirements pertaining to,
companies in the Internet industry. A number of regulatory agencies, including the Ministry of Culture, or the MOC, the Ministry of Industry and Information Technology, or MIIT, the Cyberspace Administration of China, or CAOC, the State
Administration of Radio and Television, or the SART (previously known as GAPPRFT and SARFT), the State Council Information Office, or the SCIO, and other governmental authorities, jointly regulate all major aspects of the Internet industry.
Operators are required to obtain various government approvals and licenses prior to providing the relevant Internet information services.
Our platform primarily focuses on light entertainment content. Nonetheless, certain content related to current affairs, finance, society and
economy provided on our Qutoutiao mobile application may be deemed to be news content. According to the Provisions for the Administration of Internet News Information Services issued by the CAOC on May 2, 2017 that became effective on
June 1, 2017, an Internet news license shall be obtained for a provider of Internet news information services to the public in a variety of ways, including through the offering of platforms for the dissemination of Internet news.
Shanghai Jifen, one of our consolidated entities, obtained an Internet news license from the CAOC in August 2019. However, if we fail to
maintain such license, we may be ordered to cease disseminating news and impose a fine on us of not less than RMB10,000 but not more than RMB30,000. In the event we were ordered to cease disseminating news, our business, results of operations and
financial condition could be materially and adversely affected.
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