Core Insights - The investigation into MCN (Multi-Channel Network) institutions reveals a troubling trend of unethical practices driven by profit motives, including manipulation of online traffic, spreading rumors, and producing low-quality content [2][3] Industry Overview - There are nearly 30,000 MCN institutions in China, which play a crucial role in connecting online platforms and content creators, facilitating content production, dissemination, IP incubation, and commercial monetization [2][3] - The market for MCN institutions has been growing since 2015, with the top 1% of these institutions holding over 70% of the market's total fan base [3][8] Business Operations - MCN institutions primarily engage in marketing, content production, talent management, e-commerce, and operations, with an average of 3.11 platforms being utilized for their activities [9][11] - The most frequently used platforms by MCN institutions include Douyin, Xiaohongshu, and Weibo, with a notable increase in investment in Xiaohongshu and a growing interest in WeChat video accounts and overseas platforms [11] Trust Issues and Scandals - Many leading MCN institutions have faced trust crises due to issues such as false advertising, reliance on top influencers, and low-quality products, leading to significant public backlash [15][20] - Specific institutions like "San Zhi Yang" and "Xin Xuan" have been involved in controversies related to product quality and misleading promotions, resulting in substantial fines and negative media coverage [19][20] Regulatory Environment - Regulatory bodies are increasingly focusing on the MCN sector, implementing stricter guidelines to ensure compliance and ethical practices, including prohibiting the spread of false information and malicious marketing tactics [23][25] - The introduction of a comprehensive evaluation system for MCN institutions aims to shift the industry focus from mere expansion to quality and social responsibility [23]