Industry rectification leads to closure of online storage

Another online storage company announced the closure of personal storage services. On April 27, Xunlei Kuaipan announced that in order to cooperate with the regulatory authorities' special campaign to regulate online storage, it would stop providing storage services to individual users and said it would fully transform into a personal video service. This is the fourth online storage company to announce the rectification of its personal service business in two months.

Kuaipan said yesterday that it will adjust its service functions from now on and stop storage services for individual users. All user data will be retained until June 30, 2016. After June 30, 2016, Kuaipan will fully transform into a personal video service. For individual Kuaipan users who have linked their Xiaomi accounts, the data will be retained until August 15, 2016.

Closures are coming

Before Xunlei Kuaipan announced the suspension of personal storage services, several companies had already announced the rectification of cloud storage businesses such as online disk, which attracted close attention from industry insiders and online disk users.

On March 4, 2016, the old online disk 115 Cloud Disk announced in its official community that in order to curb the possibility of criminals using 115 products to carry out illegal activities, after shutting down the "gift package file sharing" function, it rectified the "I Chat" function and removed the "file sending function" in it. This means that on 115 Cloud Disk, even friends cannot send files to each other, and 115 Cloud Disk has inevitably become a stand-alone network backup disk.

On March 17, UC Cloud Disk, owned by Alibaba, announced that in order to cooperate with the country's special rectification campaign on the use of cloud disk to spread obscene and pornographic information, it will terminate the cloud disk storage service and stop the UC Cloud Disk upload service, offline resource storage to cloud disk function, and video transcoding service from April 15.

The real shock came when Sina Weipan shut down its personal storage service on April 25. Sina Weipan announced on its official Weibo that it would shut down its free storage service for individual users on June 30, 2016. At the same time, in order to cooperate with relevant state departments in actively carrying out the investigation of pornographic and pirated content on the Internet and to centrally clean up bad information, Sina Weipan's search and sharing functions will be shut down until the cleanup is completed.

The 2015 China Mobile Internet Industry Development Report released by Bida Consulting shows that among the mainstream mobile cloud disks in China, Sina Weipan, 115 Cloud Disk and Xunlei Kuaipan ranked sixth to eighth, with 2.4 million, 2.05 million and 1.05 million monthly active users respectively. Baidu Cloud ranked first with 37.86 million monthly active users, followed by Huawei Cloud Disk with 13.71 million monthly active users, and 360 Cloud Disk ranked third with 6.87 million. At present, Baidu Cloud, Huawei Cloud Disk and 360 Cloud Disk have not made any product adjustments.

Caught in a double bind

The reason why many online storage services have shut down their personal services is that online storage services are facing the dual dilemma of increasingly stringent content review policies from regulators and the lack of an effective profit model to support their personal services.

On March 2 this year, the National Office for Combating Pornography and Illegal Publications, the Cyberspace Administration of China, the Ministry of Public Security, the Ministry of Industry and Information Technology, the State Administration of Press, Publication, Radio, Film and Television and other five departments jointly issued a notice to launch a comprehensive special rectification campaign to combat the use of cloud disks to spread obscene and pornographic information, focusing on combating the illegal use of cloud disks to spread obscene and pornographic information. They also announced six cases of using the sale of cloud disk (net disk) accounts and passwords to spread obscene and pornographic information for profit, involving cloud storage tools such as 360 Cloud Disk, 115 Net Disk, and LeTV Net Disk.

This is not the first time that the regulatory authorities have reviewed the content of online disks and punished pornography and other illegal activities. Since the National Office for Combating Pornography and Illegal Publications deployed the "Net Clean 2015" special campaign to combat pornographic and obscene information online in March 2015, the National Office for Combating Pornography and Illegal Publications has organized the "Cleaning the Internet 2015" departments in Beijing, Shanghai, Zhejiang, Jiangsu, Guangdong and other places to interview a large number of online disk companies such as LeTV Cloud, 360 Cloud Disk, Cool Disk, Huawei Cloud Disk, 115 Cloud Disk, UC Cloud Disk, and Xunlei Kuaipan, demanding the deletion of harmful information and immediate rectification, and imposed administrative penalties on serious online disk companies.

Compared with the frequent scrutiny and punishment of online disks by regulators, live video broadcasting, which is also under the attention of regulators, has flourished. The large number of free individual users of online disks inevitably requires online disk providers to invest heavily in servers, bandwidth and manpower. However, online disks lack a suitable profit model for personal services and are difficult to monetize. This has also become one of the important factors for major online disk providers to weigh.