After allowing entrepreneurs like Jack Ma to grow their businesses into internet giants, Beijing is now reining them in.
Pony Ma, the reticent founder of Tencent Holdings, China’s biggest social media and video games company, met China’s antitrust watchdog officials this month to discuss compliance at his group, two people with direct knowledge told the Reuters news agency.
The meeting is the most concrete indication yet that China’s unprecedented antitrust crackdown, which started late last year with billionaire Jack Ma’s Alibaba business empire, could soon go after other internet behemoths.
Beijing has promised to strengthen oversight of its big technology firms, which rank among the world’s largest and most valuable, citing concerns that they have built market power that stifles competition, misused consumer data and violated consumer rights.
Tencent, whose WeChat mobile messaging and payment app is ubiquitous in the world’s second-largest economy, is expected to be the next in line for sharper antitrust regulatory inquiries, said the two people and a third person with direct knowledge of the matter.
News of the meeting, which has not been reported, comes ahead of Tencent’s December quarter results on Wednesday. Analysts expect a 42 percent rise in its quarterly profit, according to Refinitiv data, although investors will be focused on regulatory developments.
Pony Ma, who had been out of the public eye for more than a year, was in Beijing this month for China’s annual parliamentary meeting and visited the State Administration of Market Regulation (SAMR) office the week before last, said the sources.
The billionaire founder of Tencent – the world’s largest video-gaming firm by revenue – is a parliamentary delegate with Guangdong province, where the company has its headquarters, and he requested the meeting with SAMR deputy head Gan Lin and other senior officials, said the two people who have direct knowledge of the matter.
Tencent and SAMR did not respond to Reuters’ requests for comment.
At the meeting, the two parties discussed how Tencent, Hong Kong’s most valuable stock with a market capitalisation of $776bn, could better comply with antitrust regulations, said one of the people.
Wu Zhenguo, the head of SAMR’s anti-monopoly bureau, who was also at the meeting, expressed concern about some of Tencent’s business practices, and asked the group to comply with antitrust rules, said the second person.
The two people said SAMR was gathering information and looking into monopolistic practices by WeChat, and how the so-called “super app” had possibly squashed fair competition and squeezed out smaller rivals.
It was not immediately known if the SAMR officials pointed out to Tencent executives specific cases of non-compliance of antitrust rules by the group.
All the sources declined to be named due to the sensitivity of the matter.
Tencent was fined 500,000 yuan ($77,000) for its 2018 investment in online education app Yuanfudao, the SAMR announced earlier this month. Chinese search giant Baidu was fined the same amount for its 2014 takeover of Ainemo Inc., a maker of consumer electronics including voice-controlled speakers. The firms were censured for not seeking prior approvals for the deals – a violation of the country’s anti-monopoly laws – though the regulator had determined the deals themselves were not anti-competitive.
Didi Mobility Pte, a unit of ride-hailing giant Didi Chuxing, and Japan’s SoftBank Corp were also issued fines of 500,000 yuan ($77,000) each – the maximum penalty possible – for setting up a joint venture without permission. A unit of social media firm ByteDance and its partner Shanghai Dongfang Newspaper Co were also penalised the same amounts for a 2019 partnership that created a video-copyright venture. ByteDance said the joint venture has since been cancelled.
A progression of rules unveiled in the past six months has gone after the dominions built by China’s most successful online entrepreneurs. The first blows fell on Jack Ma when his financial technology firm Ant’s $35bn initial public offering was scuppered at the last minute, followed by an antitrust probe into Alibaba Group Holding Ltd.