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OTT industry players in Taiwan slammed its government’s ban on iQIYI and other mainland Chinese streaming platforms as it took effect on Thursday. They said that the new policy did nothing but crush a thriving market.

Mainland OTT operators, including iQIYI and Tencent’s WeTV, have been banned from operating on the self-governed island, following rules introduced by Taiwan’s Ministry of Economic Affairs. Chinese companies had adopted indirect routes to enter the market through local agents.

These are deemed illegal on the grounds that OTT broadcasting is not open to mainland investment under the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area. The ban introduced on national security grounds, according to Taiwanese media.

The National Communications Commission is in-charge of enacting the executive order. Simultaneously, the NCC is drafting a wider bill to regulate OTT in Taiwan.

IQIYI’s Taiwan agent, OTT Entertainment said that it will respect the law and will, as a consequence, lay off dozens of employees. At a public hearing to discuss the NCC’s upcoming bill, OTT Entertainment’s chair Fan Li-da said the ban “does not solve any national security issues.”

Other OTT players said the NCC was applying draconian control over the industry, and may dent its growth.  Chien Ta-wei, head of the Taiwan OTT Association, said that the government should tackle rampant online piracy instead.

Homme Tsai, chair of Taiwan New Media and Entertainment Association, questioned the intention and rationale behind the proposed regulations. He criticized the government for its double standards, blocking mainland players, while taking no stance against other foreign players such as Netflix or Korea’s Line TV.