(Reuters) – Pony Ma, the discreet founder of Tencent Holdings, China’s largest social media and video game company, met with antitrust officials this month to discuss compliance in his group, three people with direct knowledge of the matter told Reuters .
The meeting is the most concrete indication that China’s unprecedented antitrust crackdown, which began last year with billionaire Jack Ma’s Alibaba business empire, may soon target other Internet giants.
Beijing has pledged to strengthen the oversight of its large technology companies, which are among the largest and most valuable in the world, citing concerns that they have built market power that stifles competition, misuses consumer data and violates consumer rights. consumer.
Tencent, whose WeChat mobile messaging and payment app is ubiquitous in China, is expected to be next in line for more rigorous antitrust regulatory investigations, the three people said.
The news of the meeting, which was not released, comes before Tencent’s December quarter results on Wednesday. Analysts expect a 42% increase in profit, according to data from Refinitiv, although the investor’s focus is on regulatory developments.
Pony Ma, who rarely gives interviews to the media and has 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 Market Regulation Administration (SAMR) office at last week, people said.
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 based.
Tencent requested a meeting with SAMR deputy chief Gan Lin and other senior officials, the three people said.
Tencent and SAMR did not respond to requests for comment from Reuters.
At the meeting, the two parties discussed how Tencent could better comply with antitrust rules, said two of the people.
Wu Zhenguo, head of SAMR’s anti-monopoly 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 said.
SAMR is currently collecting information and investigating WeChat’s monopolistic practices and how the super app possibly crushed fair competition and squeezed smaller rivals, two of the people said.
All sources declined to be cited due to the delicacy of the matter.
Tencent’s shares fell by 1.7% in a weaker Hong Kong market, reaching the lowest level of the day after the Reuters report.
CORRECTIVE ACTION
The meeting between Pony Ma, who is also Tencent’s president and chief executive, and antitrust officials came just days after he called for tighter governance of the Internet economy at China’s parliamentary meeting in Beijing.
Pony Ma’s discreet public profile is in sharp contrast to that of other businessman Jack Ma on Alibaba, whose public criticism of China’s regulators triggered a chain of events that resulted in the last-minute suspension of the company’s affiliate’s $ 37 billion IPO fintech Ant Group last November.
One of the people said that Tencent has not been officially notified by SAMR of any investigation into its activities, but expects a response from the regulator soon.
“As one of the two big players in China, it is perfectly normal for Tencent to be eager to be the target,” said You Yunting, a lawyer at DeBund Law Offices in Shanghai, referring to Pony Ma’s meeting with the regulatory authorities.
“There are two concerns for Tencent, an analysis of the concentration of ventures could impact the acquisition agreements, while investigations and litigations about the abuse of dominant market positions could damage the advantage of its platforms.”
To cushion the impact of any potential moves against him, Tencent has been striving to take corrective action.
Tencent is having to offer concessions in a plan to merge the country’s two major video game streaming sites in order to resolve antitrust issues, Reuters reported on Tuesday.
In a separate agreement, the company, which held a 5% stake in local gaming company Zhejiang Century Huatong Group, also planned to buy another 10%, said one of the people and another person with direct knowledge, making it the largest shareholder.
Earlier this month, however, 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; Editing by Sumeet Chatterjee and Richard Pullin