China has handed down the maximum penalties to two of the country's fastest-growing edtech startups for unfair competition, Bloomberg reported Monday.
Beijing is expanding its probe of tech companies to the online education sector following massive fines on various segments from community group-buy platforms to e-commerce.
Yuanfudao and Zuoyebang, two of China's most valuable edtech companies, have been fined by the State Administration for Market Regulation 2.5 million yuan ($389,000) each for its pricing laws in the wake of a broader crackdown on the country's most prominent internet companies.
Yuanfudao is backed by Tencent Holdings and Zuoyebang has received funding from Alibaba Group Holding, according to a statement Monday.
The penalty comes on the heels of fines imposed on four major edtech startups, TAL Education-backed Xueerxi, Koolearn Technology, GSX Techedu, and Gaosi Education - for questionable pricing policies.
According to a WeChat article published by SAMR, Yuanfudao and Zuoyebang have posted false information on their websites. Zybang, for instance, mislead customers by displaying fake customer reviews and for saying it's "cooperating with the United Nations." Yuanfudao falsified the qualifications of its teaching staff on its website.
"The fines are closely related to the recent crackdown on after-school tutoring institutions, focusing on their illegal activities and potential for stirring anxiety in society," Bloomberg quoted Ye Le, Shanghai-based analyst with China Securities, as saying.
Investors have flocked to the online education sector, which has enjoyed a boost during the pandemic. Both Zuoyebang and Yuanfudao said they accepted the Chinese regulator's punishment and are reviewing internal practices.
