Tencent takes quiet path through technological turmoil in China
In a scorching year for Chinese Big Techs, business has turned out more or less as usual for the country’s most valued tech company and its founder, now China’s second richest man.
Tencent, the $ 730 billion social media and gaming giant, and Pony Ma, its 49-year-old chief executive, avoided significant public censorship as Alibaba, Ant Group and Meituan faced serious questions from regulators on their activities and their market. Power.
Tencent is unlikely to come out unscathed, officials say quietly mounting a case against its music company, but Ma’s low profile and close attention to government relations have placed the company in a good position in negotiations. .
“Keeping quiet will help you make a fortune,” said two Tencent employees, citing a golden rule for Chinese entrepreneurs popularized by former Communist Party leader Jiang Zemin.
In contrast, his outspoken former rival Jack Ma has barely been seen in public since regulators halted the initial $ 37 billion public offering from Ant Group, his fintech company, the last year.
âPony is what the government wants in a technological framework. He’s low-key and generally accepts government plans, âsaid a tech start-up founder. “He’s the opposite of Jack Ma.”
According to two technical officials from Guangdong province, where Tencent is headquartered, the group’s music division is set to be fined heavily this summer after the Communist Party’s 100th anniversary celebrations end.
Regulators are likely to fine for antitrust abuse on Tencent Music, a music streaming service that owns about two-thirds of the Chinese online music market and which was established and listed in the United States in 2018, have officials said. Tencent declined to comment on the potential fine.
Officials added that Tencent is still negotiating hard behind the scenes over whether it should give up some of its exclusive music rights with the world’s biggest record labels or sell music apps.
âTencent will take a penalty. They must show their loyalty and make a nice gesture [for Beijing]. It all depends on Beijing – the local authorities don’t have enough power to help, âsaid a Guangdong official.
But Tencent’s core businesses, video games and the WeChat superapplication are not believed to be under pressure from regulators, although WeChat has grown into such an important social media and messaging platform as it is commonly. called “of public utility”.
Over the years, Ma has shown great ability to detect climate change to the tech industry.
At China’s annual legislative session this year, Ma, who has been a delegate to the National People’s Congress since 2013, called for tighter regulation of internet businesses, providing high-level support for the current government campaign.
The company handles many requests from various branches of government for censorship and surveillance on its messaging platforms.
In January 2020, WeChat censored hundreds of new keyboards related to the government’s handling of Covid. The information he transmitted led to arrests and sanctions, including of a man who was sentenced to prison for calling President Xi Jinping a “steamed bun.”
To strengthen its surveillance capabilities, Tencent has developed algorithms to better censor images. âThe government needs WeChat – they rely on each other,â said an employee.
Tencent has also provided cloud computing services to the government, as part of the campaign to develop Chinese “smart cities” and its engineers have been working on applications to help the Covid-19 response.
As other Chinese tech executives retreat from day-to-day management, including Zhang Yiming at ByteDance, owner of the TikTok video platform, and Colin Huang at Pinduoduo, the e-commerce group, Ma is in his 23rd year at the top of Tencent.
Born into a middle-class family on the southern island of Hainan, he began writing code in college, quickly becoming a “master of creating computer viruses,” according to an authoritative book on the history of Tencent. by reporter Wu Xiaobo.
âI’m a typical computer programmer,â Ma told Chinese media. “Even my parents didn’t expect a nerd like me to start a business.”
From his own point of view, he is “not very sociable” nor “good with words”. He rarely gives interviews or speeches, makes public appearances or posts on social media.
But under his leadership, Tencent has grown revenue 24-fold over the past decade and has become China’s most active investor, funding 160 startups last year. The value of its listed investments alone stood at 1.4 billion Rmb ($ 216 billion) at the end of March, or more than a quarter of its market capitalization.
It took stakes in Chinese companies such as the Meituan food delivery group and e-commerce juggernaut Pinduoduo, while buying shares in burgeoning overseas tech and games companies such as Snap, Riot Games and Epic Games.
Tencent also invested in a venture capital group started by the son of China’s top financial manager while taking the group’s investment for Tencent Music.
His prolific deals have also put him at odds with antitrust regulators, who have fined the company several times in recent months for failing to seek approval of prior acquisitions. Ma said the company “is actively cooperating with regulatory authorities… Including sorting out some of these past investments.”
Elsewhere, Ma has steered Tencent away from pushing the boundaries of technology and finance. As Jack Ma’s Ant Group has become China’s largest consumer lender, Tencent has fallen behind. And months before the cancellation of Ant Group’s IPO, Pony Ma tendered his resignation as a representative of Tencent’s mobile payment platform, Tenpay.
âThe fundamentals of finance are stability and health. It’s about who lives longer, not who runs faster in the short term, âPony Ma said in a 2017 legislative session, as regulators looked at financial risks. Ant now faces a “tweak” campaign designed to curtail its business as Tencent tests a credit card-like consumer loan product.
The company’s biggest PR challenge to date came four years ago, after parents and state media began complaining that Tencent’s gaming business was causing addiction among consumers. children, a campaign that led the government to suspend new gambling licenses for nearly a year.
Less than a day after People’s Daily published its first critical editorial on Tencent’s gaming business, the company announced it would set time limits on the use of children, becoming the first Chinese group to do so, more than two years before a government decree managed to force the rest of the sector to follow suit.
Since then, Ma had been “extremely focused and detail-oriented” in resolving the issue, and on at least two occasions emailed the child protection team early in the morning to give advice. and encouragement, said a team member.
Reporting by Nian Liu, Yuan Yang, Ryan McMorrow and Sun Yu