On Wednesday, Xiaohongshu, China’s leading lifestyle sharing platform, announced that it had formally filed lawsuits against four Multi-Channel Network (MCN) institutions. These institutions are allegedly engaged in the business of “ghostwriting and sending content using different accounts”, helping merchants and bloggers to carry out false promotion and damaging the platform’s content ecology and reputation.
For this reason, Xiaohongshu requires these four institutions to immediately stop their false promotional transactions, and to compensate Xiaohongshu for economic losses of 10 million yuan ($1.57 million).
The gray market of “ghostwriting and sending content using different accounts” usually refers to the following behaviors: a brand or a third-party intermediary agency that undertakes the needs of some brands would place ghostwriting and content-publishing orders to third-party platforms. They would then recruit a large number of people with physical goods, services or cash ranging from 0-1000 yuan to produce and publish content on platforms such as Xiaohongshu, Douyin and DianPing.
In addition, Xiaohongshu started a third round of cracking down on false recommendations on January 19, 2022. The company blocked 68 brands and offline merchants in the first two sweeps of its platform. In the third round of crackdowns, 6 offline merchants and 7 brands were hit with blockages.
Since December 16, 2021, when the first crackdown was launched, Xiaohongshu has banned 81 brands and offline merchants, and blocked 172,600 false recommendation notes and 53,600 accounts that violated the rules and regulations of the platform.