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Tencent boss meets China antitrust officers as scrutiny widens-sources

Reuters


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Pony Ma, the low-profile founding father of Tencent Holdings, China’s greatest social media and video video games firm, met with antitrust watchdog officers this month to debate compliance at his group, three folks with direct data of the matter instructed Reuters.

The assembly is essentially the most concrete indication but that China’s unprecedented antitrust crackdown, which began late final 12 months with billionaire Jack Ma’s Alibaba enterprise empire, might quickly goal different web behemoths.

Beijing has vowed to strengthen oversight of its large tech corporations, which rank among the many world’s largest and most respected, citing considerations that they’ve constructed market energy that stifles competitors, misused client knowledge and violated client rights.

Tencent, whose WeChat messaging and fee cellular app is ubiquitous in China, is predicted to be the following in line for sharper antitrust regulatory inquiries, mentioned the three folks.

Information of the assembly, which has not been reported, comes forward of Tencent’s December quarter outcomes on Wednesday. Analysts anticipate a 42% revenue rise, in keeping with Refinitiv knowledge, though the investor focus can be on regulatory developments.

Pony Ma, who seldom provides media interviews and had been out of the general public eye for greater than a 12 months, was in Beijing this month for China’s annual parliamentary assembly and visited the State Administration of Market Regulation (SAMR) workplace the week earlier than final, mentioned the folks.

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The Tencent founder, ranked this month as China’s second-richest particular person with a $74 billion fortune, is a parliamentary delegate with Guangdong province, the place the corporate is headquartered.

Tencent requested the assembly with SAMR deputy head Gan Lin and different senior officers, mentioned the three folks.

Tencent and SAMR didn’t reply to Reuters requests for remark.

On the assembly, the 2 events mentioned how Tencent might higher adjust to antitrust guidelines, two of the folks mentioned.

Wu Zhenguo, the pinnacle of SAMR’s anti-monopoly bureau, who was additionally on the assembly, expressed concern about a few of Tencent’s enterprise practices, and requested the group to adjust to antitrust guidelines, one among them mentioned.

SAMR is presently gathering info and looking out into monopolistic practices by WeChat, and the way the tremendous app has presumably squashed truthful competitors and squeezed smaller rivals, two of the folks mentioned.

All of the sources declined to be named as a result of sensitivity of the matter.

Tencent shares dropped as a lot as 1.7% in a weaker Hong Kong market to the touch the day’s lowest stage after the Reuters report.

CORRECTIVE ACTION

The assembly between Pony Ma, who can be Tencent’s chairman and chief govt, and the antitrust officers got here just a few days after he referred to as for tighter governance of the web financial system at China’s parliamentary assembly in Beijing.

Pony Ma’s discreet public profile is in sharp distinction to that of unrelated fellow entrepreneur Jack Ma at Alibaba, whose public criticism of China’s regulators triggered a series of occasions that resulted within the final minute halting of fintech affiliate Ant Group’s $37 billion IPO final November.

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One of many folks mentioned that Tencent had not been formally notified by SAMR of any investigation into its actions, however is anticipating to listen to from the regulator quickly.

“As one among China’s large two, it’s completely regular that Tencent felt anxiousness about being focused,” mentioned You Yunting, a lawyer with Shanghai-based DeBund Legislation Places of work, referring to Pony Ma’s assembly with the regulatory officers.

“There are two worries for Tencent, a focus of undertakings assessment might affect acquisition offers, whereas investigations and litigations on abuse of dominant market positions might damage the benefit of its platforms.”

To cushion the affect of any potential strikes in opposition to it, Tencent has been scrambling to take corrective motion.

Tencent is having to supply concessions in a plan to merge the nation’s high two videogame live-streaming websites in an effort to resolve antitrust considerations, Reuters reported on Tuesday.

In a separate deal, the agency, which held a 5% stake in native gaming agency Zhejiang Century Huatong Group, had additionally deliberate to purchase one other 10%, mentioned one of many folks and one other particular person with direct data, maing it the biggest shareholder.

Earlier this month, nonetheless, Tencent acquired 5% of Century Huatong and have become the second-largest shareholder as an alternative, trying to keep away from a probably prolonged and sophisticated antitrust approval course of, the 2 folks mentioned. (Reporting by Pei Li, Cheng Leng and Julie Zhu; Enhancing by Sumeet Chatterjee and Richard Pullin)

In-depth reporting on the innovation financial system from The Logic, delivered to you in partnership with the Monetary Submit.

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