The session between Pony Ma and antitrust officials came a few days after Ma called for stricter monitoring of the internet economy at China’s upcoming parliamentary session in Beijing.
Tencent Holdings Ltd. officially confirmed that a meeting took place between Pony Ma and Beijing’s antitrust authority. In a statement, the company alluded to the fact that the meeting was nothing out of the ordinary despite talk that the company was likely to face pressure from Beijing authorities for its business practices.
Pony Ma met with antitrust officials in March to address the company’s compliance and, according to sources, the meeting was the most solid evidence that China’s original crackdown, which began in late 2020 with Jack Ma’s Alibaba empire, is now targeting other internet giants.
China has promised to investigate concerns that many Chinese tech giants are running their businesses unethically, indicating Beijing’s concern that such tech firms have established market power that smothers competition, monopolizes the market and violates fundamental consumer rights.
Tencent’s WeChat messaging and payment mobile platform is hugely popular in China, boasting a total of 1.17 billion users at the beginning of 2020. As a result, Tencent is now expected to be the next in line for more stringent antitrust regulatory inquiries.
News of the meeting came ahead of Tencent’s announcement of its 2020 fourth-quarter earnings, in which the multinational conglomerate reported a massive 175% increase in quarterly profit, assisted by a considerable upsurge in gaming revenue.
Pony Ma, who is notorious for being private, visited Beijing in March ahead of China’s annual parliamentary meeting. While there, he also visited the State Administration of Market Regulation (SAMR).
According to sources, Tencent requested a meeting with SAMR’s deputy head Gan Lin and other high-ranking executives and part of the meeting’s agenda delved into Tencent’s business practices and how the conglomerate could better comply with antitrust rules.
According to sources, during the meeting, Wu Zhenguo, the leader of SAMR’s antimonopoly bureau, expressed concerns over some of Tencent’s business methods. Currently, SAMR is collecting data and looking into alleged monopolistic practices on the part of WeChat, specifically whether the app has violated fair competition guidelines by stifling its smaller competitors.
According to a Reuters report, Tencent shares dropped by approximately 1.7% in the Hong Kong market, leaving the stock down 0.8%.
The session between Pony Ma and antitrust officials came a few days after Ma called for stricter monitoring of the internet economy at China’s upcoming parliamentary session in Beijing.
Pony Ma’s private profile sharply contrasts with the very public profile of fellow entrepreneur Jack Ma at Alibaba. Jack Ma’s criticism of China’s regulators triggered a string of events that ended in the last-minute standstill of Ant Group’s US$37 billion initial public offering (IPO) last November.
Sources say that Tencent had not received official notice by SAMR of any investigation into its business methods.
According to You Yunting, a lawyer with the Debund Law Offices, based in Shanghai, it’s perfectly normal that Tencent felt a certain amount of anxiety about being targeted.
“There are two worries for Tencent, a concentration of undertakings review could impact acquisition deals, while investigations and litigations on abuse of dominant market positions could hurt the advantage of its platforms.”
Tencent has struggled to take action to blunt the impact of any potential moves that might be made against the company. To right itself, Tencent is required to grant concessions as part of a plan to merge the country’s top two video game livestreaming sites to alleviate antitrust concerns.
Earlier in March, Tencent procured about 5% of Century Huatong and became the second-largest shareholder, looking to bypass a conceivably long and complex antitrust approval process.
John Lo, Tencent’s chief financial officer, told investors that China’s antimonopoly showdown would have a short impact on investments in the future, as the company takes steps toward acquiring minority stakes in partnerships.
“A different antitrust regime will not impact the desirability of us investing in and supporting startups and helping them to grow into bigger, better companies over time,” Lo said.
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