Tripadvisor Stock Drops After China App Ban

China’s Cyberspace Administration (CAC) has declared a prohibition on 105 mobile applications due to breaches of the nation’s internet rules. The vast majority of these applications originate from Chinese developers, however, the American travel booking and review website Tripadvisor is also included on the list of banned apps.

Following the CAC’s announcement, Tripadvisor’s stock experienced a decline on the Nasdaq exchange, but subsequently began to show signs of recovery during after-hours trading.

Although Tripadvisor is headquartered in the United States, it, like many other international technology companies, established a collaborative partnership with a domestic technology firm to manage its operations within China. Specifically, Tripadvisor reached an agreement with Trip.com – the Chinese travel company listed on the Nasdaq, previously known as Ctrip – in November 2019. This agreement resulted in the formation of a joint venture named TripAdvisor China. The arrangement granted Trip.com subsidiary Ctrip Investment a controlling interest in the joint venture, while Tripadvisor retained a 40% ownership stake.

As a component of this agreement, Tripadvisor consented to share its content with Trip.com’s various brands, including the Chinese travel platforms Ctrip and Qunar. This provided these platforms with access to Tripadvisor’s extensive collection of international travel reviews. This positioned Tripadvisor in competition with other regional companies, such as Qyer, which is supported by Alibaba, and Klook, based in Hong Kong, in an effort to attract China’s growing number of wealthy and well-informed outbound tourists.

The CAC serves as the governmental body responsible for supervising internet regulations and censorship practices. In a concise statement, the administration indicated that it initiated enforcement actions on November 5th with the objective of “rectifying” the Chinese internet by removing applications that violated established regulations. These 105 applications represent the initial group to be prohibited, following reports from users regarding unlawful activities or content, according to the agency.

While the CAC did not detail the specific reasons for banning each application, the reported illegal activities encompassed the dissemination of pornography, encouragement of violence or terrorism, fraudulent practices or gambling, and the facilitation of prostitution.

Furthermore, eight application stores were removed from service for failing to adhere to review regulations or for permitting the download of prohibited content.

These periodic “app cleanups” are common in China, where the government maintains strict control over the flow of information. Internet services within China, particularly those that involve user-generated content, typically employ extensive censorship teams or filtering technologies to ensure compliance with governmental guidelines.

The Chinese internet landscape is undergoing rapid evolution, often outpacing the development of corresponding regulations. Consequently, authorities are continuously working to address these gaps. Applications and services may be removed due to a lack of necessary governmental approvals, or because they have published content deemed illegal or politically sensitive.

Technology companies from other countries operating in China frequently encounter the challenge of balancing the “internet freedom” principles prevalent in Western nations with the necessity of complying with Beijing’s requirements. Companies like Bing.com, LinkedIn, and Apple – among the few remaining Western technology giants in China – have all faced criticism for yielding to China’s censorship demands in the past.