NetEase, Activision caught up in China turf war

By Alexei Oreskovic and Melanie Lee

SAN FRANCISCO/BEIJING (Reuters) - A Chinese regulator has ordered top online game firm NetEase.com to stop operating a popular title, the result of an apparent governmental turf war highlighting the risks the sector faces.

NetEase said the General Administration of Press and Publication (GAPP) halted and returned its application to operate the latest version of Activision Blizzard's popular World of Warcraft game due to "gross violations" of regulations.

The agency posted a statement on its Web site demanding that NetEase suspend charging users to play the game, and disallow new account registrations, NetEase said on Monday.

The move put the recently-relaunched popular title's future into question in China, and sent NetEase and Activision Blizzard shares down 2.4 percent and 4.3 percent, respectively.

Observers said GAPP's move was the result of a recent turf war between the agency and the Ministry of Culture, which also oversees the online gaming sector.

"This is different from operating a businesses in the U.S. or Europe," Yu Yongfu, CEO of Chinese mobile Internet firm UCWeb told Reuters on the sidelines of one of China's top Internet shows taking place this week in Beijing.

"For Chinese businesses expanding in China, we need to learn how to operate suitably in the environment in order to thrive and survive," he said.

NETEASE WOES BOOST OTHERS