Rumors are swirling that Tencent will be the next target of Chinese Communist Party regulation.
Foreign media are reporting that Tencent Holdings founder Ma Huateng met with officials from the Communist Party’s anti-monopoly regulator in Beijing this month to discuss the company’s compliance. This suggests that after Jack Ma, other Chinese tech giants will soon be targeted by the Communist Party.
Reuters reported on March 24, citing multiple sources, that Tencent is expected to be the next company to face stricter anti-monopoly regulation investigations. Tencent’s WeChat instant messaging and mobile payment apps are very popular on the mainland.
Ma has been out of the public eye for more than a year, compared with Ma’s previous high profile. Ma attended the Communist Party’s two sessions in Beijing this month and visited the office of the Communist Party’s State Administration of Market Regulation (SAMR) two weeks ago, people familiar with the matter said.
Ma requested a meeting with senior officials, including Gan Lin, deputy director of the Communist Party’s State Administration of Market Regulation, the report said.
During the meeting, the sources said, the two sides discussed how Tencent could better comply with anti-monopoly regulations.
Wu Zhenguo, director of the anti-monopoly bureau of the Communist Party’s State Administration of Market Supervision, also attended the meeting and expressed concerns about some of Tencent Holdings’ business operations.
The authorities are reportedly gathering information and are reviewing Tencent WeChat’s monopoly practices.
This comes on the heels of news that Tencent Holdings could be the next target of Communist Party financial regulation.
On March 12, the CCP’s General Administration of Market Supervision (GAMS) made a decision to file a case for investigation into ten cases of implementation of operator concentration in the Internet sector, including the cases of Tencent Holdings’ acquisition of equity in Ape Coaching, Baidu Holdings’ acquisition of equity in Little Fish Group, and the establishment of a joint venture between Shanghai Oriental Newspaper and Beijing Quantum Leap Technology, and imposed fines of RMB 500,000 on each of the 12 companies involved.
In the afternoon of March 12, Tencent Holdings’ share price took a late dive, evaporating about RMB 225.4 billion in one hour.
The Bloomberg report cited people familiar with the matter as saying that Tencent Holdings was seen as the next target by the Communist Party’s top regulator after the regulatory crackdown on Ant Group. Like Ant Group, Tencent could be required to set up a financial holding company that would include its banking, insurance and payment services. The two companies would serve as models for other fintech companies in complying with stricter regulations.
Tencent, along with Alibaba, Jingdong and Baidu, jointly control more than 40 financial licenses through acquisitions or investments, according to mainland media reports. Tencent’s fintech business will generate about 84 billion yuan in revenue in 2019, accounting for 22 percent of total revenue.
Meanwhile, the CCP has stepped up its regulation of online platforms. on March 18, the CCP’s Internet Information Office conducted interviews with 11 companies, including Yingke, Xiaomi, Racer, Byte Jump, WhaleQuantum Digital Service, Cloud Account, Himalaya, Alibaba, NetEase Cloud Music, Tencent, and GoPlay.
Under the strong suppression of the Chinese Communist Party, Ant Group will set up a financial holding company and incorporate all its businesses, including technology products in blockchain and Food delivery, into the holding company, subject to strict supervision by the Chinese Communist Party regulators and meeting the corresponding capital requirements, and Ant Group will be transformed from a “financial technology company” to a “financial holding company. “The CNN article said the move shows that even if the Communist Party does not kill Ant Group, it will become a Boring Bank in the future.
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