DouYu CEO Chen Shaojie Missing and Incommunicado, Say China Reports
Chen Shaojie, the founder and CEO of leading gaming live-streaming platform DouYu, has disappeared and has been incommunicado for some three weeks, according to multiple Chinese media sources.
The local reports, subsequently carried by the Financial Times and the Alibaba-owned South China Morning Post based in Hong Kong, allege that Chen’s disappearance is related to discovery by authorities of pornography and gambling content on the platform. Both are illegal in mainland China. In a separate report, the BBC said that two prominent executives have gone missing: Chen and pharmaceuticals specialist Zhao Bingxian.
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Executive disappearances in China have often, but not always, preceded the announcement of formal investigation proceedings. Bao Fan, a banker with China Renaissance Holdings disappeared from public view in February this year. It was subsequently announced that he is detained while helping with investigations.
So far, no investigative authority in China has disclosed such a formal step against Chen and local media report that DouYu has not responded to specific questions about Chen’s whereabouts, beyond saying that the company is functioning normally. Chen was last seen in public in August at a discussion of the NASDAQ-listed company’s second quarter financial results.
Douyu has not made a regulatory filing about Chen. Nor has Tencent, the social media and games giant that is DouYu’s largest shareholder.
In May, internet regulator, the Cyberspace Administration of China, made an unusual in-person visit to DouYu-controlled premises in Hubei Province as part of a probe into the company’s alleged hosting of pornography and other vulgar content. The findings of its investigations have not been published.
State-owned China Daily went further and reported that the CAC took control of the platform for a month from May. “DouYu is being punished for failing to manage posts from its users, resulting in the spread online of harmful content, including pornography, as well as posts deemed superstitious, or about prostitution, gambling and high-interest lending,” it said at the time.
Live streaming in many forms is hugely popular in China and is a prime vector for retail sales. Live-streams of top video games players in action can attract huge audiences and top stars can earn millions of dollars. But live streaming has rarely been a profitable business for the platforms which compete for eyeballs and talent.
Tencent sought to merge DouYu and New York Stock Exchange-listed Huya in 2020, but the move was blocked by anti-monopoly regulators in 2021, during a two-year crackdown on many aspects of the Chinese tech sector. The companies have lost more than 80% of their market capitalization since that point.
In early 2021, U.S.-based investment firm and short-selling specialist Grizzly Reports published research which alleged that DouYu was permitting the illegal hosting of online lotteries created by users.
In premarket trading, before U.S. stock markets opened for business on Tuesday, DouYu’s ADRs had fallen by 10% to $0.84 per unit.
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