Day: February 19, 2019

BEIJING/SHANGHAI (Reuters) – China’s top content regulator has asked local authorities to stop submitting requests to monetize new video games while it processes a backlog of applications built up after a lengthy pause last year, three people with knowledge of the matter said.

The General Administration of Press and Publications (GAPP) issued the notice this week, the people said, indicating the impact on gaming stocks of the nine-month hiatus could continue and dulling hopes raised by the recent resumption of approvals.

The regulator’s notice has not previously been reported.

Shares of industry leader Tencent Holdings Ltd, which were up 2.2 percent in morning trading, pared back gains to trade about 1 percent higher after the Reuters report was published. Shares of smaller players also slid.

China stopped approving the monetization of new titles last March amid a regulatory body reshuffle triggered by growing criticism of games being violent and addictive, as well as concern over the increase in myopia among young people.

Gaming firms such as Tencent – China’s most valuable listed company – were able to continue filing applications, building up a backlog. They could also distribute new titles but were unable to earn any income from them, such as through in-game purchases.

The regulator resumed processing applications in December, with industry insiders estimating at least 5,000 games await approval. In China, game companies file applications to local authorities which in turn submit them to the regulator.

“The regulator asked local authorities to stop submitting applications because there is too much of a backlog for it to deal with at the moment,” said one of the people, whose company was informed about the matter by its local authority.

Game companies will still be able to file applications but they will no longer be passed on to the Beijing regulator while it deals with applications already in hand, said a second person.

The people declined to be identified as they were not authorized to speak with media on the matter.

GAPP and the Propaganda Department of the Communist Party of China, which oversees GAPP, did not immediately respond to requests for comment.

The approval freeze dragged down shares in Tencent and wiped billions of dollars off its market value. Among titles for which Tencent is awaiting a license to monetize is “PlayerUnknown’s Battlegrounds Mobile”, which industry insiders estimate could generate annual revenue of up to $1 billion.

The freeze has also hit many smaller companies that rely on a number of game releases each year.

The regulator approved 1,982 domestic and foreign online games during January-March last year before the freeze, government data showed. It approved 9,651 domestic and foreign online games in all of 2017.

It has approved 538 games since December.

(Reuters) – Qualcomm Inc is urging U.S. trade regulators to reverse a judge’s ruling and ban the import of some Apple Inc iPhones in a long-running patent fight between the two companies.

Qualcomm is seeking the ban in hopes of dealing Apple a blow before the two begin a major trial in mid-April in San Diego over Qualcomm’s patent licensing practices. Qualcomm has sought to apply pressure to Apple with smaller legal challenges ahead of that trial and has won partial iPhone sales bans in China and Germany against Apple, forcing the iPhone maker to ship only phones with Qualcomm chips to some markets.

Any possible ban on iPhone imports to the United States could be short-lived because Apple last week for the first time disclosed that it has found a software fix to avoid infringing on one of Qualcomm’s patents. Apple asked regulators to give it as much as six months to prove that the fix works.

Qualcomm brought a case against Apple at the U.S International Trade Commission in 2017 alleging that some iPhones violated Qualcomm patents to help smart phones run well without draining their batteries. Qualcomm asked for an import ban on some older iPhone models containing Intel Corp chips.

In September, Thomas Pender, an administrative law judge at the ITC, found that Apple violated one of the patents in the case but declined to issue a ban. Pender reasoned that imposing a ban on Intel-chipped iPhones would hand Qualcomm an effective monopoly on the U.S. market for modem chips, which connect smart phones to wireless data networks.

Pender’s ruling said that preserving competition in the modem chip market was in the public interest as speedier 5G networks come online in the next few years.

Cases where the ITC finds patent violations but does not ban the import of products are rare. In December, the full ITC said it would review Pender’s decision and decide whether to uphold or reverse it by late March.

In filings that became public late last week ahead of the full commission’s decision, Apple for the first time said that it had developed a software fix to avoid running afoul of Qualcomm’s patent. Apple said it did not discover the fix until after the trial and that it implemented the new software “last fall.”

But Apple said that it would need six months to verify that the fix will satisfy regulators and to sell its existing inventory. Apple asked the full commission to delay any possible import ban by that long if the commission reverses the judge’s decisions.

In a filing late on Friday, Qualcomm argued that Apple’s disclosure of a fix undermined the reasoning in Pender’s decision and that the Intel-chipped phones should be banned while Apple deploys its fix.

“Pender recommended against a remedy on the assumption that the (Qualcomm) patent would preclude Apple from using Intel as a supplier for many years and that no redesign was feasible,” Qualcomm wrote. “Apple now admits—more than seven months after the hearing—that the alleged harm is entirely avoidable.”