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Tencent – the giant behind numerous Internet companies

Tencent is known to only a few people in this country. Yet the Chinese company is one of the giants of the technology industry. Together with Baido and Alibaba, the groups are even more influential than the GAFA, consisting of Google, Amazon, Facebook and Apple.

The Chinese Internet group Tencent, which dominates the Asian market, is active in many areas. Most notably in instant messaging services, social networks, online media, interactive entertainment and net commerce. Through worldwide acquisitions, Tencent has even been able to increase its influence and is now one of the most valuable corporations in the world. However, Tencent is not undisputed in the West. In the meantime, the wind is blowing hard in the company’s face, even in its home country of China.

The emergence of Tencent

Tencent was founded in 1998 in Shenzhen by Ma Huateng and Zhang Zhidong. In 2021, it was not only the largest and most valuable company in China, but also one of the most valuable in the world (11th place), with a market capitalization of 418.3 billion euros and a turnover of 81.6 billion euros. Tencent does business with everything the Internet has to offer: Instant messaging services, social networks, online media, online gaming and online trading.

This impressive development was made possible not least thanks to the ruling Chinese Communist Party. Fearing increasing criticism of its policy of suppressing opinion, the party rigorously shut down and thus eliminated Western platforms and services such as Facebook, Google, WhatsApp and Twitter years ago. Tencent then filled the resulting vacuum with its own offerings. Today, with its social network QQ, one of the ten most visited websites in the world, the company is regarded as the Chinese Facebook, and with its messenger service WeChat as the Chinese WhatsApp. And Tencent also has alternatives ready in terms of search engine (QQ Games SoSo), payment service (WeChat Pay and Tenpay) or e-mail client (Foxmail).

Tencent has a hand in many companies

Tencent’s activities, however, go long beyond China. As early as 2008, the company began buying up share packages from a whole series of Western companies in order to avoid becoming too dependent on the Chinese market. Initially, shares were acquired in Riot Games, the U.S. online and computer games company that produced “League of Legends,” among other games. Through further acquisitions, Riot Games was finally taken over completely.

The Finnish company Supercell (including “Clash of Clans” and “Clash Royale”) also belongs to Tencent today, and another future takeover candidate could be Epic Games, in which Tencent holds a 48 percent stake. Shares are also held in Spotify and Snapchat, among others.

While these strategic purchases are obvious due to their thematic affinity to the Tencent portfolio, the investment in Tesla is surprising, at least at first glance. It is true that the company “only” owns five percent of the shares. But that alone makes Tencent one of the largest shareholders in the U.S. electric car manufacturer, which is virtually worshipped by its fans.

Data and child protection

However, Tencent’s success cannot disguise the fact that the company has repeatedly faced harsh criticism in the past. Points of criticism were and are, for example, the handling of customers’ privacy, but also brand piracy or a lack of child protection. To this day, Tencent refuses to answer questions about how it deals with government inquiries about messages sent via WeChat. And the company reacts harshly to tangible criticism. When three bloggers on WeChat were critical of Tencent’s conduct in 2019, the company summarily sued the three. A policy of intimidation with which Tencent is clearly on the government’s course.

However, the company seems to have learned something about child protection. However, this shows that Tencent solves problems with a sledgehammer, so to speak. Since late summer 2021, only users who are at least 18 years old have been allowed to play on the computer between ten o’clock in the evening and eight o’clock in the morning. This is controlled via a data check of the ID card. In the meantime, they have even gone one step further. Minors can now only play for one hour a day during the week and two hours a day on weekends and public holidays.

KP does not even stop at Tencent and Co.

The fact that these measures are based on self-control and the realization that it is detrimental to the development of minors to spend day after day in front of a computer or on a cell phone can at least be questioned. After all, such far-reaching decisions are usually only made by one institution in China – the communist party. And in fact, there were indications that the authorities would take tougher action against online game providers. For example, a state-run business newspaper had already disqualified online games as “spiritual opium” and “electronic drugs” at the beginning of August. A clear signal to those responsible at Tencent.

In general, it has been observed for some time that the KP puts the country’s tech companies, which have grown into mega-corporations in just a few years, in their place as soon as they develop something like a life of their own. In June 2021, for example, ” ARD online ” ran the headline “Beijing messes with tech corporations” and quoted Duncan Clark, boss of Beijing-based consultancy BDA, as follows: “It appears that the government in China is rethinking its relationship with major tech companies.” Quite obviously, some of the big tech companies have grown too big too fast – and, more importantly, too powerful – for the communist state leadership, he said. As a result, he said, the prominent position of the Communist Party repeatedly leads to tensions between the state-owned, CP-supervised major corporations on the one hand and the private sector on the other.

And even a mere post can cause even one of the richest men in China to suddenly fall low. In 2021, for example, a comment made online about China’s banking system cost the head of Ant (parent company of payment and financial services app AliPay) an IPO that was just hours away and would have raised 30 billion euros for the company. The instruction to stop was said to have come from the very top at the time.