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Ali Baba (NYSE:BABY) shares rose in premarket trading on Friday, even as it was reported that the Chinese government had acquired so-called “golden shares” in two of the company’s media and entertainment units, as Beijing continues strengthen its surveillance of the country’s digital content.
The Cyberspace Administration of China has acquired a 1% stake in Youku, a video hosting service, and UC Web, which operates a mobile browser, among other products, according to the Financial Times, which first reported News.
In September, an entity of Zhejiang Media Group, a state-controlled company, acquired a stake in Alibaba’s Youku Film and Television (BABA).
An entity known as WangTouSuiCheng acquired a 1% stake in Guangzhou Lujiao from Alibaba (BABA) in December, the news outlet added.
Alibaba (BABA) did not immediately respond to a request for comment from Seeking Alpha.
Furthermore, the FT added that the CAC was discussing the acquisition of a similar “golden share” in a subsidiary of Tencent (OTCPK:TCEHY).
Shares of Tencent (OTCPK:TCEHY) were quiet in premarket trading on Friday.
According to Varietyany potential gold shares would be for Tencent’s (OTCPK:TCEHY) video business only and would not affect its video game business or corporate parent company.
So-called “golden shares” allow entities, in this case and many others, a government, to gain representation on the board and allow veto power over certain actions. Golden shares have special voting rights and, in certain cases, have more power than other types of shares.
Several other Chinese companies have “gold share” deals with the government, including ByteDance (BDNCE) and Weibo (WB), Reuters reported. In certain cases, they can provide assistance to companies trying to obtain licenses to distribute news online or display video and audio content.
On Monday, Alibaba (BABA) founder Jack Ma relinquished his control of Ant Group, in line with moves by Beijing to provide support for the financial services technology company.
