In a hot year for Chinese big tech, it was more or less normal for the country’s most valuable tech company and its founder, now China’s second richest man.
Tencent, the $ 730 billion social networking and gaming giant, and Pony Ma, its 49-year-old CEO, have escaped significant public criticism when Alibaba, Ant Group and Meituan raised serious regulatory questions about their businesses and their market represented performance.
Tencent is unlikely to get away scot-free, say officials who are quietly drafting a lawsuit against its music business, but Ma’s low profile and close attention to government relations put the company in a good position during the negotiations.
“If you keep calm, you can make a fortune,” said two Tencent employees, citing a golden rule for China’s entrepreneurs popularized by former communist party leader Jiang Zemin.
In contrast, his outspoken former rival Jack Ma has barely been seen in public since regulators halted the $ 37 billion IPO of his fintech firm Ant Group last year.
“Pony is what the government wants a tech manager to do. He’s low profile and generally goes along with the government’s plans, ”said a founder of a technology start-up. “He’s the opposite of Jack Ma.”
Two tech officials in Guangdong province, where Tencent is headquartered, say the group’s music department is likely to receive a heavy fine this summer after the Communist Party’s 100th anniversary celebrations conclude.
Regulators are likely to fine Tencent Music, a music streaming service that comprises about two-thirds of China’s online music market and which was spun off and listed in the U.S. in 2018, officials said. Tencent declined to comment on the potential fine.
Officials added that Tencent is still negotiating hard behind the scenes over whether to give up some of its exclusive music rights with the world’s biggest record labels or sell music apps.
“Tencent will take a penalty. You need to show your loyalty and do a nice gesture [for Beijing]. It all depends on Beijing – the local authorities do not have enough power to help, ”said a Guangdong official.
However, Tencent’s core businesses, video games and the super app WeChat, are not believed to be under regulatory pressure, even though WeChat has become such an important social media and messaging platform that it is commonly referred to as a “public service” becomes.
Over the years, Ma has shown a keen ability to sense changes in climate towards the tech sector.
At China’s annual legislative session this year, Ma, who has been a delegate to the National People’s Congress since 2013, called for stricter regulation of internet business, thereby supporting the ongoing high-level government campaign.
The company handles numerous requests from various government agencies for censorship and surveillance on its messaging platforms.
In January 2000, WeChat censored hundreds of new keyboards related to the government’s handling of Covid. The information provided has resulted in arrests and punishments – particularly one man who was sentenced to prison for calling President Xi Jinping a “steamed bun”.
To improve its surveillance skills, Tencent has developed algorithms to better censor images. “The government needs WeChat – they rely on each other,” said one employee.
Tencent has also provided cloud computing services to the government as part of its push to develop China’s smart cities, and its engineers have been working on apps to help respond to Covid-19.
As China’s other technical executives step down from day-to-day operations, notably Zhang Yiming of ByteDance, owner of TikTok video platform, and Colin Huang of Pinduoduo, the e-commerce group, Ma is at the helm of Tencent in his 23rd year.
Born into a middle-class family on the southern island of Hainan, he began writing code at university and quickly became a “master at creating computer viruses,” according to an authorized book by journalist Wu Xiaobo on the history of Tencent.
“I’m a typical computer programmer,” Ma told the Chinese media. “Even my parents didn’t expect a nerd like me to be able to start a company.”
According to his own statements, he is “not very sociable” and also “good with words”. He rarely gives interviews or speeches, appears in public, or posts on social media.
But under his leadership, Tencent has grown its revenue 24x over the past decade and has become China’s most active investor, funding 160 startups last year. The value of its listed investments alone was Rmb 1.4 trillion (USD 216 billion) at the end of March, more than a quarter of its market capitalization.
It has acquired stakes in Chinese upstarts such as the grocery company Meituan and the e-commerce juggernaut Pinduoduo, while also buying stakes in emerging tech and game companies overseas such as Snap, Riot Games and Epic Games.
Tencent also invested in a venture capital group founded by the son of China’s chief financial officer, while making investments from the group for Tencent Music.
Its productive transactions have also led to conflicts with antitrust authorities, which have fined the company multiple times over the past few months for failing to seek approval for past acquisitions. Ma said the company is “actively working with regulators. . . including weeding out some of those past investments ”.
Elsewhere, Ma stopped Tencent from pushing the boundaries of technology and finance. While Jack Ma’s Ant Group became China’s largest consumer lender, Tencent followed suit. And months before Ant Group’s IPO was canceled, Pony Ma submitted his resignation as a representative of Tencent’s mobile payment platform Tenpay.
“The core tenets of finance are stability and health. It’s about who lives longer, not who runs faster in the short term, ”Pony Ma said during a 2017 legislature when regulators were investigating financial risk. Ant is now facing a “rectification campaign” designed to shrink its business while Tencent tests a credit card-like consumer credit product.
The company’s biggest public relations challenge to date came four years ago after parents and the state media began complaining that Tencent’s gaming business was causing addiction to children, a campaign that led the government to almost new gambling licenses suspended for a year.
Within a day of the People’s Daily posting its first critical comment on Tencent’s gaming business, the company announced that it would be the first Chinese company to set time limits on children’s use, more than two years before a government decree was issued force the rest of the industry to follow suit.
Since then, Ma has been “extremely focused and detail-oriented” in handling the problem and has emailed the child protection team at least twice in the early hours of the morning for advice and encouragement, said a member of the team.
Reporting by Nian Liu, Yuan Yang, Ryan McMorrow and Sun Yu
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