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China microblog use falls as rumor crackdown kicks in, Sina shares suffer

By Paul Carsten

BEIJING (Reuters) - The ascendancy of mobile messaging in China slashed the number of microblog users by 9 percent last year, a government report showed, triggering the steepest decline in the share price of top microblog operator Sina Corp in three months.

Blockbuster mobile messaging apps such as Tencent Holdings Ltd's WeChat have become venues of choice for users who want to express views without fear of retribution. The government last year started clamping down on "online rumors" which it says threaten social stability.

The government threatened legal action against people whose perceived rumors on microblogs such as Sina Weibo are reposted more than 500 times or seen by more than 5,000 people. The crackdown is seen as a crude tool to halt criticism of the ruling Communist Party.

The number of microblog users fell to 280.8 million from 308.6 million a year earlier, according to the official China Internet Network Information Center report released on Thursday.

The decline could be felt by microblog operators such as Sina, Tencent and Sohu.com Inc who could lose advertisers or may be forced to lower prices.

Shares of Sina had fallen 4.75 percent by the close of trade in New York on Thursday, their biggest decline in three months.

The government's campaign against online rumors, which critics say is crushing free speech, has particularly singled out Sina Weibo as a conduit.

It has signaled that it plans to increase its control of social media, including WeChat, and further "manage" the Internet.

The Information Center's report is not representative of Sina Weibo, and looked at the market as a whole, said Sina spokesman Liu Qi. Sina was not aware of how the Center collected its data as it had not contacted the company, Lui said.

Sina Weibo had 60.2 million daily active users as of September, according to the company, rising 11.2 percent from June.

Tencent and Sohu declined to comment.

Tencent, China's biggest listed Internet company with a market value of $123 billion, operates microblog Tencent Weibo. It also operates WeChat, which had 272 million active users as at September-end, according to the company.

Its shares were up 2.93 percent as of Friday afternoon in Hong Kong.

China had 618 million Internet users as at the end of last year, according to the report, 81 percent of whom use mobile Internet.

(Editing by Christopher Cushing)

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