China Fines Tutoring Apps Backed By Tencent, Alibaba

China is expanding its far-reaching tech campaign into online education, issuing the maximum penalties to two of the country’s fastest-growing tutoring apps for violating competition and pricing laws, reported Bloomberg.

The State Administration for Market Regulation imposed fines of 2.5 million yuan (US$389,000) each on Yuanfudao, backed by Tencent Holdings Ltd., and Zuoyebang, which has received funding from Alibaba Group Holding, according to a statement Monday, May 10. The firms were penalized for making misleading claims about their businesses from falsifying the qualifications of teaching staff to faking user reviews, the antitrust watchdog stated.

Yuanfudao and Zuoyebang stated they accepted the penalties and will rectify the relevant problems.

The explosive growth of private education providers during the pandemic has drawn increased scrutiny over the sector. Last month, Beijing’s market regulator fined four private education providers including GSX Techedu as well as a TAL Education Group unit for pricing violations. China’s education ministry also issued a statement reiterating limits on after-school study programs in order to ensure that students get enough sleep.

“The fines are closely related to the recent crackdown on after-school tutoring institutions, focusing on their illegal activities and potential for stirring anxiety in society,” said Ye Le, Shanghai-based analyst with China Securities. “The regulatory pressure will keep building for the rest of the year.”

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