In a rough year for the big Chinese tech companies, it has been somewhat business as usual for the country’s most valuable tech company, and its founder, now the second richest man in China.
Tencent, the $730 billion social networking and gaming giant, and its 49-year-old CEO Pony Ma have avoided major public criticism at a time when Alibaba, Ant Group and Meituan have faced serious questions from regulators about their business and market strength.
Tencent is unlikely to escape unscathed, according to officials who are quietly bringing a case against its music business, but what is unknown and its close interest in government relations has put the company in good standing during negotiations.
“Being calm 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.
By contrast, his outspoken former rival, Jack Ma, has barely been seen in public since regulators halted the $37 billion initial public offering of Ant Group, his fintech subsidiary, last year.
“A dowry is what the government wants in a tech executive. It is unremarkable and generally aligns with government plans,” said one of the startup tech founders.
According to technical officials in Guangdong Province, where Tencent is based, a heavy fine will likely be imposed on the group’s music department this summer, after the conclusion of the Communist Party’s centenary celebrations.
Officials said regulators are likely to fine antitrust violations at Tencent Music, a music streaming service that owns about two-thirds of the online music market in China that was detailed and listed in the United States in 2018. Tencent declined to comment on the potential fine.
Officials added that Tencent is still negotiating diligently behind the scenes about whether it should give up some of its exclusive music rights with the world’s largest record labels, or sell music apps.
“Tencent will take a penalty. They have to show their loyalty and make a kind gesture [for Beijing]. It’s all up to Beijing – local authorities don’t have enough power to help, said one official in Guangdong.
But Tencent’s core business, video games and super app WeChat are not believed to face pressure from regulators, although WeChat has become an important social media and messaging medium commonly referred to as “utilities”.
Over the years, Ma has shown an extreme ability to sense changes in the climate towards the technology sector.
At China’s annual legislative session this year, Ma, who has been a delegate to the National People’s Congress since 2013, called for tougher regulation of internet companies, and high-level support for the current government’s campaign.
The company handles numerous requests from various branches of government for censorship and surveillance on its messaging platforms.
In January 2000, WeChat censored hundreds of new consoles related to The government’s handling of COVID-19. The information she relayed led to arrests and punishments – notably for a man who was sentenced to prison for calling President Xi Jinping a “steamed bun”.
To enhance its monitoring capabilities, Tencent has developed algorithms to better monitor images. “The government needs WeChat – they depend on each other,” said one employee.
Tencent has also provided the government with cloud computing services, as part of a push to develop Chinese “smart cities” and its engineers have worked on apps to aid in the Covid-19 response.
With other tech executives in China retreating from day-to-day management, most notably Zhang Yiming at ByteDance, owner of video platform TikTok, and Colin Huang at Pinduoduo, an e-commerce group, they are in their 23rd year at the helm of Tencent.
Born to a middle-class family on the southern island of Hainan, learned to code at university, he soon became a “professor in creating computer viruses,” according to an authoritative book on Tencent history by journalist Wu Xiaobo.
“I am a typical computer programmer,” Ma told Chinese media. “Even my parents didn’t expect a nerd like me to be able to start a company.”
According to his own description, he is “very antisocial”, and “not very good with words”. He rarely gives interviews or speeches, appears in public or posts on social media.
But under his leadership, Tencent has grown its revenue 24 times over the past decade and has become the most active investor in China, having funded 160 start-ups last year. Its publicly traded investment alone was worth 1.4 trillion renminbi ($216 billion) at the end of March, more than a quarter of its market value.
It has taken stakes in Chinese start-ups such as food delivery group Meituan and e-commerce table Pinduoduo, while buying shares in overseas tech and gaming startups such as Snap, Riot Games and Epic Games.
Tencent has also invested in a venture capital group It was started by the son A senior financial officer in China while taking investments from the group for Tencent Music.
Its prolific deals also put it at odds with antitrust regulators, who have fined the company several times in recent months for not seeking approval for previous acquisitions. Ma said the company is “actively cooperating with regulatory authorities… including screening some of these previous investments.”
Elsewhere, Ma has led Tencent away from pushing the boundaries of technology and finance. While Jack Ma’s Ant Group has grown to become the largest consumer bank in China, Tencent has lagged behind. Months before Ant Group’s initial public offering was called off, Bonnie Ma submitted his resignation as representative of Tencent’s mobile payment platform Tenpay.
“The fundamental principles of finance are stability and health. It’s about who lives longer, not who works faster in the short term,” said Bonnie Ma during a 2017 legislative session as regulators scrutinized financial risks. Ant is now facing a “correction” campaign from Set to downsize as Tencent tests a consumer loan product that looks like a credit card.
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 addictive to children, a campaign that led the government to halt new game licenses for nearly a year.
Within a day of the People’s Daily publishing its first critical opinion piece on Tencent’s gaming business, the company announced it would set time limits on children’s use, becoming the first Chinese group to do so, more than two years before a government decree forced the rest of the sector to follow. shoe.
Since then, Ma has been “very focused and detail-oriented” in addressing the issue, and on at least two occasions emailed the child protection team in the early hours of the morning offering advice and encouragement, one team member said.
Additional reporting by Nian Liu, Yuan Yang, Ryan McMorrow and Sun Yu