China publishes "blacklist" of video Web sites

By Sophie Taylor

SHANGHAI (Reuters) - Chinese video-sharing Web site Tudou.com, backed by a unit of venture capital heavyweight IDG, received an official government warning Thursday under new rules to curb pornographic, violent and political content.

Industry insiders said the move could scare away future investors in the sector.

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 Inc.

But Beijing said late last year that only state-owned or state-controlled companies can apply for licences 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 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.