b'Jiajia Luo v. Sogou, Inc., Case No. 19-cv- (AIC) launched an investigation into Douyin and 230 (LJL), 465 F. Supp. 3d 393 (S.D.N.Y.Sogou. During the investigation, the Beijing AIC June 8, 2020)determined that Sogou failed to include a keyword Potential Violations Of Chinese Internetblacklist of the three words in its automated content control system, which caused Sogou to miss blocking Content Laws the publication of ads containing that illegal keyword Sogou Inc. is a China-based technology companycombination. Although there was never a finding by that, as of September 2017, was Chinas fourth largestthe Chinese authorities that Sogous procedures prior Internet company based on monthly active users. Byto the IPO were deficient or in breach of any statute or mobile queries, the companys Sogou Search engine,law, Sogou agreed to revise its advertising policies and which is powered by artificial intelligence, is the secondaudit procedures to ensure compliance with relevant largest search engine in China. Sogou Search providesregulations. Specifically, Sogou established a team unique services, such as a cross-language searchdevoted to improving its advertisement screening service which eliminates the Chinese-English languagemechanisms and enhancing its use of AI technology to barrier by enabling users to locate English contentensure that unlawful advertisements were blocked in a on the Internet by querying searches in Chinese andtimely manner, and it suspended part of its advertising then reading content for which Sogou provides abusiness for ten days beginning on July 1, 2018.Chinese translation. On July 2, 2018, J.P. Morgan issued a research Sogou is subject to Chinas Advertising Law whichreport estimating that Sogous suspension of search provides that advertisements may not include materialadvertising instituted after the investigation would have prohibited by the laws and regulations of the Peoplesa 6% negative impact to Sogous quarterly revenue Republic of China (PRC). Additionally, since Decemberand a 3144% negative impact on Sogous third 2013, the Administrative Measures for Content Self- quarter non-GAAP operating profit. On July 30, 2018, Review by Internet Culture Business Entities haveSogou filed its second quarter earnings press release required Sogou to review the content of products andwith the SEC which discussed the investigation and the services to be provided prior to providing such contentten-day advertising suspension. Sogou also announced and services to the public. Sogou is also subject to theit would phase out hardware products that [were] not Measures for the Administration of Internet InformationAI-enabled, such as some legacy models of Teemo Services, which indicate that entities that provideSmart Watch, and transition to products that integrate[d] information to Internet users must obtain an operating[Sogous] leading AI technologies. Sogou expressly license from the Ministry of Industry and Informationanticipated that the new strategy would result in a Technology or its local branch and are required toreduction in hardware revenues in the second half of police their Internet platforms and remove certain2018. Following these disclosures, the price of Sogous prohibited content. ADS fell by 19%. By October 30, 2018, approximately one year after the IPO, the price of Sogous ADS had On November 9, 2017, Sogou completed an IPO of 45fallen to $5.50a 57% decrease from its share price at million American Depositary Shares at a price of $13the time of the IPO.per share. In connection with the IPO, Sogou filed aInvestors filed a putative class action asserting claims Registration Statement and a Prospectus (together,under Sections 11 and 15 of the 1933 Act against Sogou, the Offering Documents) with the SEC. On April 27,seventeen individual defendants including several 2018, the PRC enacted Article 22 of the Law of theof its officers and directors, and the underwriters of PRC on the Protection of Heroes and Martyrs, whichthe IPO. Plaintiffs filed a second amended complaint makes it forbidden to distort, smear, desecrate, oron September 12, 2019, which defendants moved to deny the deeds and spirit of heroes and martyrs anddismiss on September 17, 2019. provides that [t]he names and likenesses of heroes and martyrs must not be used, or covertly used,On October 22, 2019, plaintiffs filed a third amended by any organization or individual for . commercialcomplaint alleging that Offering Documents fail[ed] advertisements, damaging the reputation and honor ofto disclose that Sogous controls over advertising heroes and martyrs. contents and were materially inadequate to meet In early June 2018, Douyin, a Chinese short-form[Sogous] obligations to review the content for which it video platform company, produced advertisementswas responsible and to prevent Sogou from allowing containing jokes about an individual characterized asdissemination of prohibited content. Plaintiffs also a martyr dying in combat which were displayed onasserted that the Offering Documents were false and Sogou Search. Shortly thereafter, the Beijing Municipalmisleading and omitted material information about Cyberspace Affairs Commission and the BeijingSogous smart hardware products and Sogous strategy Municipal Administration of Industry and Commerceto better leverage AI technologies. Additionally, 67'