KUAISHOU-W is experiencing a period of significant challenges.

Following consecutive regulatory scrutiny and rumors of core executive departures, the company is now paying the price for its previous aggressive expansion strategies.

As the Double 11 shopping festival approaches, on September 19th, the State Administration for Market Regulation unexpectedly intervened by launching an investigation into Kuaishou's subsidiary Chengdu Kuaigou for suspected violations of the E-commerce Law.

"Multiple irregularities persist, with illegal activities such as false marketing and counterfeit products continuing despite repeated prohibitions, drawing strong public criticism" - marking the first time a live-streaming e-commerce platform has faced investigation by market regulators for its e-commerce operations, with notably sharp language used.

Multiple e-commerce industry professionals observed that the era of "penalizing streamers but not platforms" has definitively ended, with KUAISHOU-W serving as an example to others.

Subsequently, on September 20th, the Cyberspace Administration summoned KUAISHOU-W for talks regarding "trending topics featuring celebrity gossip and trivial matters clustering on the main trending list."

The rumored departure of Senior Vice President Xiao Gu, who oversees local lifestyle services, further exemplifies the company's unfocused business strategy.

Previously, KUAISHOU-W held a significant position in the short video sector through its unique development model and substantial user base. However, the company now faces unprecedented challenges, from regulatory interventions to slowing business growth and intense competition with Douyin and Xiaohongshu.

The deeper issue lies in this upheaval representing not just KUAISHOU-W's transformation difficulties, but an inevitable reflection of the short video industry's transition from the "traffic dividend era" to the "value competition era."

For KUAISHOU-W to break through this competitive landscape, relying solely on sentiment and "Lao Tie" culture proves insufficient.

**01 Double 11 Approaches as KUAISHOU-W Faces Major Setback**

"We temporarily reduced our Double 11 investment in KUAISHOU-W by 30%, redirecting resources toward Douyin and Tmall, primarily due to concerns about regulatory investigations affecting platform traffic stability and declining consumer trust."

Several e-commerce practitioners indicated that frequent regulatory actions have prompted some merchants to adjust their platform budget allocations.

Recently, major e-commerce platforms have hosted Double 11 product selection meetings, with Taobao-Tmall announcing spot sales and no minimum purchase requirements, while Douyin incorporated Mid-Autumn Festival into its Double 11 promotional activities. On September 15th, KUAISHOU-W's "Peak-Breaking Double 11" merchant conference and product selection meeting concluded. Industry speculation suggests this year's Double 11 will begin in mid-October.

This year's Double 11 proves more challenging than last year's. As online growth peaks, Alibaba, Meituan, and JD.com's instant retail battle extends offline for traffic. Companies are seeking secondary growth drivers to maintain overall performance.

At this critical juncture, Chengdu Kuaigou, as KUAISHOU-W's core e-commerce operator, became the first platform to cross regulatory "red lines" under new regulations.

According to corporate records, Chengdu Kuaigou operates as a wholly-owned KUAISHOU-W subsidiary, specifically managing "Kuaishou Store" e-commerce operations. Its leadership consists of core founding team members: Yang Yuanxi and Yin Xin both serve as Senior Vice Presidents of KUAISHOU-W Group, responsible for content security, infrastructure, and procurement respectively.

Legal expert Zhu Wei, Vice President of the Beijing E-commerce Law Research Association, explained that Kuaigou's investigation may involve business entity qualifications, product quality and food safety issues, and misleading consumer practices. Implementation requires coordination with the "Network Transaction Management Measures." Investigation doesn't equate to wrongdoing, and any penalties would depend on violation severity and illegal gains, awaiting further regulatory announcements.

On the evening of September 19th, following regulatory talks, Chengdu Kuaigou responded to the market regulator investigation by stating it would actively cooperate and use this opportunity to improve compliance and fulfill primary responsibilities.

According to Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, KUAISHOU-W's regulatory talks and subsidiary investigation represent one of its most severe regulatory storms in recent years.

He noted that short-term impacts include effects on stock price, brand reputation, and merchant confidence; long-term consequences could undermine the "content + e-commerce" dual-engine development foundation if compliance gaps aren't thoroughly addressed. Whether KUAISHOU-W can leverage this "crisis" to force reforms and rebuild trust will determine its ability to weather this cycle.

**02 Genetics Determine Position**

KUAISHOU-W's investigation isn't coincidental but represents accumulated risks from its long-term reliance on "white-label product expansion models" reaching a breaking point.

"Our platform's user base skews toward new-tier markets, with 70% from third-tier cities and below, while maintaining advantages at both ends - high proportions of young users and senior demographics," previously noted Ren Tao, KUAISHOU-W's Magnetic Engine fashion sector head.

Although KUAISHOU-W began developing "Kuai Brands" from 2022 and introduced the "New Market Town E-commerce" concept, white-label products remain central to its platform.

Like other e-commerce platforms' origins, KUAISHOU-W built its foundation on white-label products, accumulating industrial belt white-label manufacturers.

For instance, during 2024 and 2025's 618 shopping festival, Yashumman consistently topped KUAISHOU-W's women's clothing sales rankings - a brand created by platform influencers. Beyond Yashumman, virtually no traditional established brands appeared among 2025's 618 women's clothing top merchants.

"KUAISHOU-W live streaming users don't prioritize brands but show strong follower loyalty - they'll purchase if prices are reasonable and they like the streamer," explained Xiao Gao, an e-commerce operations professional. On KUAISHOU-W, products priced 10-100 yuan sell best, primarily including food and beverages, beauty and skincare, and clothing - categories comprising over half of total sales volume.

To maintain traffic stickiness, KUAISHOU-W's algorithm long favored low-priced products, creating a vicious cycle of "low-price traffic attraction - quality decline - increased complaints - further price compression."

"Originally 120-gram work gloves now only weigh 80 grams, otherwise they lack competitiveness," said Li Yong, a Linyi labor protection equipment merchant. Previously, platform traffic rules explicitly required same products to be priced 20% below Taobao to enter recommendation pools, forcing him to reduce material standards to maintain profits. Currently, KUAISHOU-W employs price radar scanning mainstream e-commerce platforms every 15 minutes, requiring 1%-5% lower pricing for recommendation pool access.

A fast-moving consumer goods brand's e-commerce director previously acknowledged: "Building brand presence on KUAISHOU-W proves extremely difficult - users only recognize 9.9 yuan free shipping and 19.9 yuan two-piece deals. Slight quality improvements or 10 yuan price increases result in 30%+ traffic declines."

This "scale-heavy, quality-light" development model enabled rapid KUAISHOU-W growth but ultimately triggered systematic regulatory intervention.

KUAISHOU-W's e-commerce scale has essentially peaked, presenting one of the biggest challenges for CEO Cheng Yixiao's leadership.

Caught between compliance requirements and growth stagnation, which direction will Cheng Yixiao lead KUAISHOU-W's breakthrough?

Second quarter KUAISHOU-W e-commerce GMV reached 358.9 billion yuan, growing only 17.6% year-over-year - significantly slower than previous years.

Conversely, competitor Douyin e-commerce maintains strong growth momentum. According to reports, 2024 Douyin e-commerce GMV approximated 3.5 trillion yuan, growing 30% year-over-year, with 2025 targets reaching 4.2 trillion yuan. Douyin e-commerce head Kang Zeyu announced at the 2025 company-wide meeting that market share continues rising, currently ranking third industry-wide.

Meanwhile, Taobao-Tmall Group's 2024 GMV reached approximately 8 trillion yuan, PDD about 5.2 trillion yuan.

Comparatively, KUAISHOU-W e-commerce lags significantly, representing only fractions of these three giants' volumes.

KUAISHOU-W's e-commerce monetization rate - platform commissions - remains relatively low. Second quarter data shows other revenue including AI and e-commerce totaled 5.237 billion yuan against 358.9 billion yuan e-commerce GMV.

Even accounting for all other revenue, KUAISHOU-W's monetization rate (platform revenue/GMV) reaches only 1.5%, below PDD's 4.5%, Douyin e-commerce's 9%, and Taobao-Tmall's 3.77% (2024 data).

This indicates that despite attracting substantial traffic through live streaming and advertising, KUAISHOU-W's e-commerce operations haven't achieved profitability, remaining in a "loss-making for publicity" phase.

However, this investigation might become a crucial transformation opportunity for KUAISHOU-W.

By establishing comprehensive compliance and quality control systems, KUAISHOU-W might achieve transformation from "scale priority" to "quality and scale balance" - potentially Cheng Yixiao's core future challenge.

**03 KUAISHOU-W's Season of Troubles**

While e-commerce issues persist, KUAISHOU-W's fundamental content platform has encountered additional problems.

On September 20th, KUAISHOU-W faced scrutiny for promoting celebrity gossip and trivial matters, disrupting online ecosystem health.

KUAISHOU-W responded by immediately establishing a specialized rectification team to advance ecological governance around trending lists, continuously improving content standardization and diversity.

Interestingly, this response closely resembles its 2018 statement when summoned for "allowing underage streamers to publish inappropriate content," raising questions about actual rectification effectiveness.

Subsequently in 2021 and 2024, KUAISHOU-W faced additional penalties for "spreading children's suggestive content and using minors in sexually suggestive videos for traffic" and "inadequate youth mode implementation."

Currently, KUAISHOU-W still contains numerous boundary-pushing behaviors.

KUAISHOU-W appears trapped in a cycle: "violation-summons-rectification-re-violation." This vicious cycle continuously erodes the company's foundation.

This year alone, the single "Deyun Douxiao Society" infringement case resulted in 89.1 million yuan penalties, "Chang Feng Du" infringement cost 33 million yuan, with total penalties exceeding 100 million yuan.

Competitors have built comprehensive "initial review-secondary review-tertiary review" content audit mechanisms, combined with AI clustering technology to disperse homogeneous content, achieving 220% year-over-year growth in quality content core viewing time while effectively avoiding regulatory risks and advancing traffic value.

Clearly, KUAISHOU-W shows obvious generational gaps in content monetization logic.

Examining recent KUAISHOU-W controversies, this crisis escalates along the path of "traffic monetization contradictions - business trial failures - decision-making mechanism defects - governance vicious cycles."

Xiao Gu's potential departure further exemplifies KUAISHOU-W's unfocused business strategy.

Just two months after local lifestyle services completed structural adjustments, rumors suggest KUAISHOU-W local lifestyle business head Xiao Gu may leave, though official confirmation remains pending.

According to internal emails, KUAISHOU-W integrated local lifestyle from independent business division into commercialization systems in July, with Magnetic Engine head Liu Xiao providing unified management.

Per internal communications, local lifestyle integration into commercialization systems will increasingly rely on advertising resource synergy. This differs completely from Meituan's "dine-in + delivery" coordination and Douyin's "traffic-conversion" pipeline.

However, questions arise whether Xiao Gu's previously promoted "new-tier cities + AI" strategy can continue.

While this strategy helped KUAISHOU-W profit in lower-tier markets, Douyin has added numerous merchants in third and fourth-tier cities through "Xindong Waimai" and similar services.

With Meituan defending and Douyin accelerating deployment, whether KUAISHOU-W can maintain its "Lao Tie route" becomes a focal point.

Xiao Gu's departure may not be coincidental, potentially indicating KUAISHOU-W's internal reconsideration of local lifestyle business direction. After all, breaking through competitive landscapes requires more than sentiment and "Lao Tie" culture alone.

Overall, KUAISHOU-W's predicament essentially reflects deep misalignment between traffic-driven thinking and sustainable commercial logic.

This upheaval represents not only KUAISHOU-W's transformation difficulties but an inevitable reflection of the short video industry's transition from "traffic dividend era" to "value competition era."

KUAISHOU-W is simply too slow.