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CHINA BRIEF | Cheetah Mobile targeted by law firms following ad fraud scandal

The firm’s accounts were disabled on Google’s AdMob, AdManager and Play Store on February 20 due to compliance violations related to fake traffic.

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US-headquartered law firm Howard G. Smith and Glancy Prongay & Murray LLP announced separately investigations into Beijing-based tech company Cheetah Mobile (NASDAQ: CMCM) on Tuesday, suspecting the firm to have violated securities laws, to the detriment of investors.

Both firms cited a disclosure from Cheetah that revealed the firm’s accounts had been disabled on Google’s AdMob, AdManager and Play Store on February 20 due to compliance violations related to fake traffic.

Cheetah’s mobile utility products, which included phone storage cleaners and antivirus software, generated RMB 54.3 million in revenue for Cheetah Mobile in Q1, down by 62.6% year-on-year due to the suspension of the company’s Google ad accounts, said these two firms  in their respective press release, citing Cheetah’s earnings release on June 10.

Investigations into this company come after Luckin Coffee shocked US investors with its accounting fraud scandal in April.

Cheetah’s shares closed at USD 1.96, down by nearly 10% on Tuesday.

This article is part of KrASIA’s “China Brief” section, where KrASIA’s reporters will provide quick daily updates about the tech ecosystem in China.