Tencent Holdings Ltd (騰訊) founder Pony Ma (馬化騰) — the second-richest man in China — has met with Chinese antitrust regulators and agreed that his firm would be “as compliant as possible,” after rival technology giant Alibaba Group Holding Ltd (阿里巴巴) was battered by legal woes.
Tencent, which owns WeChat and a lucrative gaming empire, is the latest tech conglomerate to fall in the crosshairs of the regulators.
They have launched a blitz on apparent anticompetitive practices, threatening to slice up supersized firms whose reach now stretches into the daily finances of the Chinese public.
Photo: Reuters
Last week, they summoned 11 tech firms for talks on cybersecurity.
Ma said that he would “actively cooperate with regulatory authorities and be as compliant as possible” during a news briefing on Wednesday on Tencent’s annual results, Chinese financial news Web site Yicai reported.
Tencent president and chief executive director Martin Lau (劉熾平) also said that he had met with the Chinese government several times to discuss antitrust efforts and hoped to create a “healthy environment” to foster innovation.
Lau acknowledged that companies like Tencent tread a fine line between public duty and profit motive as they get larger, but the “boring answer” was to remain compliant and stay in touch with the government.
Asked whether Tencent’s core gaming and entertainment businesses might attract antitrust regulators’ attention, company executives pointed to the sheer number of competitors.
That was in contrast with a quarter earlier, when they stressed that new antitrust rules focused more on transaction-based platforms than on Tencent’s entertainment businesses.
“We have always been very focused on compliance, and we will continue to operate strictly in compliance with the rules and regulations,” Lau told reporters on a conference call.
Any requirements to form a financial holding company would not have an impact on its business, he added.
Tencent’s attempt to allay investor concerns over regulatory scrutiny comes after it posted revenue growth that barely met expectations.
Sales rose 26 percent to 133.7 billion yuan (US$20.46 billion) in the fourth quarter last year, versus a 133.1 billion yuan average forecast.
Net income was 59.3 billion yuan, with one-time gains contributing over half of its profit. That compared with the 32.9 billion yuan projected.
It is unclear how far Beijing intends to go in its bid to rein in Tencent and other technology companies.
In the short term, investors will likely focus more on how the world’s largest game publisher could sustain a COVID-19 pandemic-induced entertainment boom, while delving deeper into newer businesses like advertising and payments.
The company’s shares slumped 5 percent from US$80.93 to US$76.81 by close of trading on Wednesday.
Additional reporting by Bloomberg
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