(Reuters) – Pony Ma, the low-key founder of Tencent Holdings, China’s largest video game and social media company, met with antitrust watchdog officials this month to discuss compliance in his group, three people told Reuters. with direct knowledge of the matter.
The meeting is the most concrete indication yet that China’s unprecedented antitrust crackdown, which began late last year with billionaire Jack Ma’s Alibaba business empire, could soon target other internet giants.
Beijing has pledged to strengthen oversight of its large technology firms, which are among the world’s largest and most valuable, citing concerns that they have built market power that stifles competition, misuses the world’s data. consumer and violates consumer rights.
Tencent, whose WeChat mobile payment and messaging app is ubiquitous in China, is expected to be next in line for more precise antitrust regulatory inquiries, the three people said.
News of the meeting, which has not been reported, comes ahead of Tencent’s December quarter results on Wednesday. Analysts are expecting a 42% increase in earnings, according to Refinitiv data, although investors’ focus will be on regulatory developments.
Pony Ma, who rarely gives media interviews and had been out of the public eye for over a year, was in Beijing this month for China’s annual parliamentary meeting and visited the office of the State Administration for Market Regulation (SAMR). ) the week before, he said. people.
The founder of Tencent, ranked this month as the second-richest person in China with a fortune of $ 74 billion, is a parliamentary delegate from Guangdong province, where the company is headquartered.
Tencent requested the meeting 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.
At the meeting, the two sides discussed how Tencent could better comply with antitrust rules, two of the people said.
Wu Zhenguo, the head of SAMR’s antitrust office, who was also at the meeting, expressed concern about some of Tencent’s business practices and asked the group to comply with antitrust rules, one of them said.
SAMR is currently gathering information and analyzing WeChat’s monopolistic practices, and how the super app has possibly crushed fair competition and squeezed out smaller rivals, two of the people 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 to hit the lowest level of the day after the Reuters report.
The meeting between Pony Ma, who is also president and CEO of Tencent, and antitrust officials came a few days after he called for stricter governance of the internet economy at China’s parliamentary meeting in Beijing.
Pony Ma’s low-key public profile stands in stark contrast to that of fellow unrelated businessman Jack Ma on Alibaba, whose public criticism of China’s regulators triggered a chain of events that resulted in the last-minute halt to the $ 37 billion IPO. from Ant Group, a fintech subsidiary, last November.
One of the people said that SAMR had not officially notified Tencent of any investigation into its activities, but expected to hear from the regulator soon.
“As one of China’s Big Two, it’s perfectly normal for Tencent to feel anxious about being attacked,” said You Yunting, a lawyer at the Shanghai-based Law Offices of DeBund, referring to Pony Ma’s meeting with regulatory officials. .
“There are two concerns for Tencent, a review of the concentration of companies could affect the acquisition agreements, while investigations and litigation on the abuse of dominant market positions could damage the advantage of its platforms.”
To cushion the impact of any potential moves against it, Tencent has been scrambling to take corrective action.
Tencent has to offer concessions on a plan to merge the country’s two major video game streaming sites to resolve antitrust concerns, Reuters reported Tuesday.
In a separate deal, the firm, which had a 5% stake in local gaming firm Zhejiang Century Huatong Group, had also planned to buy another 10%, said one of the people and another person with direct knowledge, making it the largest shareholder.
However, earlier this month, Tencent acquired 5% of Century Huatong and became the second-largest shareholder, seeking to avoid a potentially lengthy and complicated antitrust approval process, the two people said.
Reporting by Pei Li, Cheng Leng and Julie Zhu; Edited by Sumeet Chatterjee and Richard Pullin