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Mainland Chinese streaming giants iQIYI and Tencent are set to be banned from operating in Taiwan from next month, following the revision of an existing law that will bar their local partners from providing services for them.

Companies and individuals in Taiwan will be banned from providing services for OTT operators from mainland China, Taiwan’s Ministry of Economic Affairs said in an announcement on Tuesday. Two weeks of public consultation will be followed by the final version of the law being gazetted and take effect on Sept. 3.

iQIYI previously applied to set up a subsidiary in Taiwan in 2016, but the move was rejected by as OTT broadcasting is not on the list of services open to mainland investment under the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area.

However, mainland operators including iQIYI and Tencent’s WeTV managed to set foot in Taiwan by using indirect and “illegal” routes through local service providers, the ministry said.
In the case of iQIYI, it used its Hong Kong subsidiary to form a partnership with Taiwanese agency iOTT. Tencent launch WeTV by striking a deal with Taiwan’s Ren Feng Media Tech through its Hong Kong arm Image Future Investment.

It appears that a similar April move by Chinese state broadcaster CCTV prompted the Taiwan authorities to accelerate their move against mainland operators.

The National Communications Commission will be in charge of the OTT-TV matters once the executive order takes effect, the ministry said. Those violating the ban will be fined between $1,700 (NT$50,000) and $170,019 (NT$ 5 million) and ordered to terminate the services provided for mainland operators, Taiwan media reported.

The NCC has published a draft of a wider bill to regulate OTT in Taiwan. The commission’s newly appointed chair Yaw-Shyang Chen said that a public hearing will take place before Sept. 20.