China is slapping a major online provider of pirated videos in the country with a 260 million yuan (US$42 million) fine.
A regulatory authority in the Chinese city of Shenzhen, the Shenzhen Market Supervision Administration, issued the fine on Tuesday and said that the company, Shenzhen QVOD Technology, had distributed a local movie and TV series online without the publisher's permission. The piracy amounted to 86 million yuan in illegal revenue, the regulator said.
QVOD had not only repeatedly pirated the content, but refused to stop its distribution, the regulator said in a post on Sina Weibo, a Twitter-like microblogging site. As a result, Chinese authorities levied a fine triple the amount in revenue QVOD had made from the piracy.
The company could not be immediately reached for the comment. QVOD, however, has been facing growing scrutiny from Chinese authorities. In May, the company was found guilty of distributing pornography online, and is facing a related police investigation, according to China's state-controlled press.
QVOD rose to notoriety after the company developed peer-to-peer video sharing software called "Kuaibo." The software became a popular way for bootleggers to distribute pirated movies and TV shows without paying expensive video bandwidth costs.
But not everyone was a fan of the software. China's leading video sites, which spend millions of dollars to buy licensed TV shows and movies, saw the video-sharing technology as a business threat. One of the sites, Youku Tudou, demanded QVOD help stop the piracy. In November, Chinese video sites sued QVOD over the alleged video piracy.
QVOD has previously denied responsibility for piracy. But starting in March, QVOD began changing its business model to support only licensed video content.
QVOD last month shut down its site at kuaibo.com and replaced it with a statement announcing that it will work to create a healthy online video market. "We will voluntarily cooperate with the relevant authorities in facing administrative penalties," the statement adds.