China Microblog Users Fall 9% on Tencent App Competition

Users of China’s Twitter-like microblogs fell for the first time amid challenges from new instant-messaging applications offered by Tencent Holdings Ltd. (700) and a government crackdown on spreading rumors.

The number of users of Weibo, the Chinese version of microblogs, dropped 9 percent from a year earlier to 281 million at the end of 2013, according to a report published by China Internet Network Information Center. That marked the first decline in the platform use in figures dating back to 2010. The country had 618 million Internet customers as of Dec. 31, a 4.6 percent increase from the 591 million posted in June.

Sina Corp. (SINA), the owner of China’s largest Weibo outlet that’s facing competition from Tencent’s WeChat instant-messaging application, fell in Nasdaq Stock Market trading. The government strengthened punishments in September for online defamation, reflecting a stepped-up Communist Party campaign to rein in a forum that has challenged the country’s censorship regime.

“WeChat has become the trendy hot thing of the day and is replacing Weibo,” Doug Young, author of the book “The Party Line: How the Media Dictates Public Opinion in Modern China,” said yesterday by telephone. “The crackdown impacted a certain group of users on Weibo.”

Tencent shares climbed 3.2 percent, the most in more than two months, to close at a record HK$529 in Hong Kong. The stock almost doubled in value last year, compared with a 2.9 percent advance for the benchmark Hang Seng Index.

Sina Stake

The number of people who access Weibo from their mobile phones fell 2.9 percent to 196 million as of Dec. 31.

Sina Weibo’s daily active users totaled 60.2 million from June to September, executives said on a conference call in November. The company’s Weibo unit agreed to sell an 18 percent stake for $586 million to China’s largest e-commerce company, Alibaba Group Holding Ltd., in April.

Other companies that run similar platforms include Sohu.com Inc. (SOHU) and a version offered by Tencent.

Sina fell 4.8 percent to $80.58 in Nasdaq trading yesterday, the most in more than three months. Sohu declined 0.4 percent to $75.57.

Mobile Internet

Sina Weibo’s active users rose in the first three quarters, Liu Qi, a spokesman for the Beijing-based company, said by phone. The Internet center’s report looks at the entire market and doesn’t accurately reflect Sina Weibo’s business, he said. Jiang Xin, a spokeswoman for Sohu in Beijing, said she couldn’t immediately comment.

The outlook for Weibo isn’t optimistic, the Internet center said. Among people who reduced Weibo usage, 37.4 percent moved to WeChat, the report showed. High-end Weibo customers showed the largest decline in usage, it said.

Mobile-phone Internet users in China increased by 19 percent to 500 million as of Dec. 31, according to the report. The number of Chinese residents shopping online jumped 25 percent to 302 million in 2013.

Social-media sites including Sina Weibo have become platforms used by Chinese citizens to expose corruption and wrongdoing in a country where all domestic newspapers, television and radio stations are state-owned. The largest service providers on China’s Internet aren’t under government ownership.

China said in September that authorities could jail web users for as long as three years for posting comments deemed defamatory, in a legal interpretation that defines punishments for people who violate government Internet controls.

People face imprisonment if defamatory rumors they post online are read by more than 5,000 people, reposted more than 500 times or cause the subjects to hurt themselves, commit suicide or “experience mental disorders,” the official Xinhua News Agency reported.

To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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