Exclusive: Tencent boss meets Chinese antitrust officials as control expands – sources
© Reuters. Pony Ma Huateng, Chairman and Chief Executive Officer of Tencent, visits WAIC in Shanghai
By Pei Li and Julie Zhu
(Reuters) – Pony Ma, the unremarkable founder of Tencent Holdings (OTC :), China’s largest social media and video game company, met with antitrust watchdogs this month to discuss compliance in his group on the matter, Reuters said.
The meeting is the most concrete evidence yet that China’s unprecedented crackdown on antitrust law began late last year with billionaire Jack Ma’s Alibaba (NYSE 🙂 Business empire, could target other internet giants soon.
Beijing has vowed to strengthen oversight of its big technology companies, some of the largest and most valuable in the world, and expressed concerns that they have built market power that stifles competition, misuses consumer data and violates consumer rights.
Tencent, whose WeChat mobile messaging and payments app is ubiquitous in China, is expected to be the next to raise tougher antitrust inquiries, the three people said.
The news of the meeting, which has not yet been reported, precedes the Tencent quarter results in December on Wednesday. According to refinitive data, analysts expect earnings to rise 42%, although investors will focus on regulatory developments.
Pony Ma, who rarely does media interviews and has not been seen in public for more than a year, was in Beijing for the annual parliamentary session in China this month and visited the people’s office of the State Market Regulator (SAMR) the week before last.
The Tencent founder, ranked China’s second richest person with $ 74 billion net worth this month, is a parliamentary delegate in Guangdong Province, where the company is headquartered.
Tencent asked to meet with SAMR deputy chief Gan Lin and other senior officials, the three people said.
Tencent and SAMR did not respond to Reuters’ requests for comment.
During the meeting, the two parties discussed how Tencent could better comply with antitrust regulations, two respondents said.
Wu Zhenguo, head of SAMR’s Antimonopoly Bureau, who also attended the meeting, expressed concern about some of Tencent’s business practices and urged the group to comply with antitrust regulations, one of them said.
SAMR is currently gathering information and investigating WeChat’s monopoly practices and how the super app may have stifled fair competition and pressured smaller rivals, two respondents said.
All sources declined to be named due to the sensitivity of the matter.
Tencent shares fell as much as 1.7% in a weaker Hong Kong market, hitting the day’s lowest, according to Reuters report.
The meeting between Pony Ma, who is also Chairman and CEO of Tencent, and the antitrust officials took place a few days after his call for tighter governance of the internet economy at the Chinese parliamentary session in Beijing.
Pony Ma’s discreet public profile contrasts sharply with that of Alibaba’s unrelated co-entrepreneur Jack Ma, whose public criticism of China’s regulators sparked a chain of events that resulted in fintech subsidiary Ant Group’s IPO last November stopped at the last minute.
One respondent said Tencent had not been officially notified of an investigation into its activities by SAMR, but expects to hear from the regulator soon.
“As one of the big two in China, it is perfectly normal for Tencent to be afraid of being targeted,” said You Yunting, an attorney for Shanghai-based DeBund Law Offices, referring to Pony Ma’s meeting with them Supervisory authorities.
“Tencent has two concerns: A concentration of the corporate review could impact acquisition deals, while investigations and litigation into abuse of dominant positions could affect its platforms’ advantage.”
Tencent has made efforts to take corrective action to mitigate the effects of potential moves.
Tencent must make concessions to merge the country’s two main video game live streaming sites to address antitrust concerns, Reuters reported Tuesday.
In a separate deal, the company, which held a 5% stake in local gambling company Zhejiang Century Huatong Group, had also planned to buy another 10%, said one of the people and another person with direct knowledge, making them the largest shareholder .
However, earlier this month Tencent acquired 5% of Century Huatong and instead became the second largest shareholder, avoiding a potentially lengthy and complicated antitrust approval process.