CCTV recently uncovered links leading to false advertisements on Toutiao, a Beijing-based news-reading platform. On March 30, Toutiao responded,
We have been trying to crack down on the false ads, which were posted by staff who were tempted by external interests and violated corporate interests. Those staff colluded with external parties and evaded Toutiao’s review system.
Toutiao said that the fraudulent ads have been removed and the accounts related to those ads have been permanently closed and blacklisted. Toutiao has additionally terminated all cooperation with the Nanning agent involved in the illegal activity.
On the evening of March 29, the CCTV-2 Half-Hour Economy program said that they have received numerous reports from viewers claiming that Toutiao published false advertisements on its platform and infringed consumer rights and interests. CCTV reporters verified that Toutiao indeed obtained ill-gotten gains by false advertising in second-tiered and third-tiered cities, and deceived consumers using ‘smart’ technology. The ads shown on Toutiao seemed normal, but clicking on them triggered illegal ads to appear.
The reporter also found that Toutiao ads changed according to the city. For example, in Nanning, “beneficial qi and blood” appears in Toutiao’s recommendation column. Upon clicking the ad, the page jumps to an over-the-counter drug advertisement named “Qi Dong Nourishing Blood Capsule”. The ad page indicates the product composition, specification and treatment function, yet no price information. The ad guides consumers to click to go to the next page. On the next page, a person claiming himself as a “medical expert” from the Chinese Academy of Medicine appears and recommends one-on-one medical guidance.
According to Article 16 of China’s Advertising Law, ads for medicine, pharmaceutics, and medical devices may not have recommended or certified by spokesmen. An advertising spokesmen include natural persons, legal persons or organizations who recommend and certify products and services in their own names or images. CCTV-2 pointed out that the ads on Toutiao have seriously violated the provisions of the advertising law. The ads on the Toutiao home page were completely legitimate, but once consumers click into the substantive content, illegal content appeared.
Toutiao Advertising Department staff told reporters that the home page published legitimate product ads on Toutiao. Ad content on the second page, which users have to click to enter, disregarded the provisions of the advertising law.
Toutiao insiders informed that its target advertising revenue in 2018 is 30 to 50 billion yuan ($4.8 to $8 billion). Toutiao’s target revenue is growing geometrically: in 2016, its target revenue was six billion yuan; in 2017, its target revenue was 15 billion yuan ($2.5 billion); and in 2018, the target revenue is 30 to 50 billion yuan ($4.8 to $8 billion) . Toutiao’s target revenue in 2018 is almost a three fold increase of its 2017 target revenue. In 2020, its target revenue will be $10 billion.
To this end, Toutiao had made reckless moves. At the end of September 2017, news surfaced that Toutiao sales staff threatened Baidu‘s customers to have ads on Toutiao. Although Toutiao immediately punished the employees involved, news of the event had adverse effects.
Toutiao executives were also interviewed by the Beijing Cyberspace Administration for disseminating pornographic and vulgar information, and illegally providing internet news and services. Toutiao homepage stopped updates for 24 hours, from 6 p.m. on Dec. 29, 2017 to 6 p.m. on Dec. 30, 2017. Toutiao was forced to overhaul the reports released.
Toutiao was established almost six years ago and has 240 million active users.
The following is Toutiao’s response to the illegal ads:
Also, Toutiao decided to dismiss the Sichuan branch staff responsible for the ad fraud, as their behavior had seriously violated Toutiao Sales Supervision System. They retain the rights to be held accountable for follow-up. Toutiao will also impose serious penalties on the director of the employees mentioned above according to the company system.
Toutiao will then make a round of inspection and rectification to all sales personnel and advertising agencies.
4. Toutiao will take the following urgent measures to protect the legitimate rights and interests of users:
- A. Toutiao will launch a risk alert system. When users click on an ads banner on Toutiao to jump to another page, they will receive a risk alert. All page jumps must be confirmed by the user.
- B. Toutiao will continue to follow and observe the Advertising Law, Interim Measures on Administration of Internet Advertisingj and other relevant laws and regulations. Toutiao will impose rigorous review on advertisement qualifications. Relying on artificial intelligence qtechnology, Toutiao will strengthen inspections on illegal advertising, and strive to achieve “seamless inspection” within 24 hours. Illegal advertisements will immediately be removed upon discovery and anyone associated will be penalized by Toutiao.
5. Toutiao has opened a channel for reporting illegal advertisements. Users can directly report fraudulent ads on the Toutiao app, which Toutiao will investigate immediately. Toutiao will also reward effective reports.