Tencent is a Chinese conglomerate worth more than Facebook, MasterCard, and Samsung combined. It has its tentacles in almost every industry worldwide, making it hard to define its primary function.
WeChat, an app created by Tencent, is known as the "everything app" and the "operating system of China." Almost all of China's 1.4 billion population use WeChat for an average of four hours every day and dominates every aspect of life in China.
Tencent's mascot is a penguin, but it could be better represented as a giant octopus. The Chinese government has access to all data on WeChat, making it one of the most powerful surveillance tools ever created.
Tencent is the largest gaming company in the world and is also invested in companies like Tesla, Reddit, Snapchat, Esports, and Universal Music.
Tencent's vision is to connect people and everything worldwide, making it difficult to grasp its size. It has been accused of privacy violations, monopolistic practices, and using WeChat for population control.
Governments worldwide view WeChat as a security threat, and the Trump administration has banned it from US app stores. Pony Ma, the founder and CEO of Tencent, is introverted and doesn't like being in the spotlight.
Tencent is a Chinese conglomerate worth more than Facebook, MasterCard, and Samsung combined, with investments in gaming, Esports, and various other global companies.
WeChat, created by Tencent, dominates every aspect of life in China, from banking to social media and has raised concerns about privacy and surveillance.
Amnesty International criticized Tencent for its treatment of data and alleged zero transparency, and the Trump administration has banned WeChat from US app stores as a security threat.
Tencent has faced accusations of monopolistic practices and privilege from the Chinese government.
The founder and CEO of Tencent, Pony Ma, is introverted and prefers to stay out of the spotlight.
Tencent's influence extends beyond China and has been accused of using its power to influence global decisions, like the NBA's streaming agreement with them.
Founder Pony Ma and his friends founded Tencent, an internet chat service similar to ICQ.
WeChat has a mobile payments platform called WeChat Pay
Over a billion people in China use WeChat every day
Tencent is closely aligned with the Chinese government and sometimes uses anti-competitive tactics
Tencent collects data for China's social credit scoring system
China cracked down on big tech, imposing fines and new regulations
Tencent lost over $500 billion in market cap since the crackdown began
Tencent may have to catch the next wave, like the metaverse, to stay ahead
Amnesty International carried out a report on how messaging apps handle their data, and they concluded that Tencent was the worst offender, allegedly scoring zero out of a hundred for its treatment of data.
Tencent has massive problems about transparency and what they do with data, where it ends up, and not even denying that it gives the CCP a backdoor to access all encrypted messages.
Tencent's vision is to connect people and everything, making it difficult to grasp just how large Tencent is.
The West has only recently realized Tencent's influence, but it has been a force in China for some time.
Tencent's power and influence are only growing, making it a company to watch in the future.
Tencent's Influence on Decisions Outside of China 06:47
Blizzard Entertainment, the studio behind World of Warcraft, was partially owned by Tencent and banned a gamer who endorsed the pro-democracy movement in Hong Kong.
China seemed to be using Tencent as a weapon to influence decisions outside of China.
Tencent's influence extends to the NBA, where Tencent had a deal to stream their matches.
In 2019, when Daryl Mori, the manager of Houston Rockets, tweeted "Fight For Freedom, Stand with Hong Kong," Tencent said they would not be streaming any Rockets matches in the future.
The manager was forced to delete his support for Hong Kong, backtrack on his stance, and apologize for his tweets.
Players then came out stating that they love China.
Tencent is one of the greatest business success stories ever. At one point, the company had only a thousand dollars in its bank account.
The journey of how a group of friends turned their struggling startup into one of the world's largest companies is remarkable and filled with useful lessons and genius business strategies.
What they have achieved is ridiculously impressive.
Tencent has been unfairly caught in the middle of a political storm that they didn't want any part of.
Tencent is often surrounded by controversy, including their brutal monopolistic practices to crush any competition, their blatant plagiarism of just ripping off other companies and apps, extreme censorship and violations of privacy and freedom of speech.
Accusations of poor working conditions and the fact that multiple countries now see it as a national security risk because of its close ties to the Chinese government.
Just dismissing Tencent as a puppet of the CCP is unfair. In fact, right now, the Chinese government is actively hurting Tencent's business and is responsible for wiping hundreds of billions of dollars from Tencent's valuation.
Tencent decided they wanted to get into the security market as well, so they created their own very similar version of Kihu's security software called QQ Doctor.
Tencent almost immediately gained a 40% market share in China by integrating QQ Doctor into the already popular QQ software.
Kihu fought back by launching a big media campaign accusing Tencent of spying on its users, saying Tencent accessed user data and files on people's devices it didn't have permission to.
Tencent sued Kihu, but in the court of public opinion, this backfired as it looked like a bigger company just trying to silence a smaller company with legal threats rather than actually trying to demonstrate their innocence.
Tencent's Gamble with Kihu Security Software 30:33
Tencent launched its Kihu 360 Safeguard security software in 2006.
QQ was one of Tencent's most popular products at that time.
Users had to choose between keeping Kihu Security Software or their beloved chat app.
If Kihu Security Software was detected on the system, QQ stopped working.
Tencent's gamble paid off, as most users were connected to QQ and didn't want to abandon it.
Kihu lost users instead, and people switched to QQ's antivirus software, which was very similar anyway.
Tencent has a strategy of acquiring companies or copying them and crushing the competition.
In China, hundreds of competitors can emerge within hours of launching an idea.
Pony Ma, founder of Tencent, said that in America when someone brings an idea to the market, they usually have several months before competition pops up, allowing them to capture significant market share.
WeChat added features like Moments, a real-time social media feed of posts, images, and articles, and Public Accounts, a blogging service that allowed people to write articles which could then be shared on Moments.
There were also official accounts, which allowed publishers to distribute content and businesses to distribute products and services.
WeChat’s features made it easier for people to follow brands that they were interested in, and it helped Tencent to dominate the social media market in China.
WeChat launched a feature called Mini Programs in January 2017, which allowed users to access tens of thousands of other apps within WeChat's own app, bypassing the need for an App Store.
Mini Programs meant there was basically no need to even have other apps on your phone because services from other businesses were now available via WeChat as well.
For example, China's dominant ride-sharing platform, DD, has its own Mini Program within WeChat, so if you want a taxi, there's no need for a separate app.
WeChat's Dominance and Tencent's Business Model 41:16
WeChat's mini programs feature has made Tencent the gatekeeper to the market for other businesses in China.
Tencent can effectively tax all other companies by taking a percentage of revenue generated through their mini programs.
WeChat is an all-in-one app that has everything inside of it, so people don't need to use the app store.
Companies almost have to partner with Tencent to be used, given WeChat's dominance.
WeChat doesn't spam users with ads and makes most of its money through microtransactions.
Over a billion people use WeChat in China, and it's used for many different parts of their life every single day.
WeChat's Limited Popularity Outside of China 43:10
Estimates suggest that up to around 100 million people use WeChat outside of China, but it's a tiny fraction compared to the well over 1 billion people inside of China who use WeChat.
Most of the people who use WeChat outside of China are Chinese expats living abroad or people needing to connect with others who are in China.
Outside of China, there are concerns about a single company controlling everything, and there is enough concern about big tech and social media.
Tencent's Relationship with the Chinese Government 44:25
Tencent is one of many Chinese tech giants that benefited from the Chinese government's plans in 1979 to give some Chinese companies a huge amount of freedom as long as they were benefiting the country overall.
The Chinese government was happy to allow Tencent to build such a dominant company by any means necessary without any real regulation.
Tencent was an appealing prospect for the Chinese government as it had access to so much data, which was great for government surveillance and censorship and understanding the psyche of its citizens.
Tencent's relationship with the Chinese Communist Party (CCP) is not straightforward as they knew it was important to make sure Tencent didn't have too much power.
Tencent's dominance is sometimes used anti-competitive tactics.
The CCP was wary of how much power Tencent had, but they were mostly happy to not interfere and let Tencent continue to grow its dominance.
Tencent's partnership with the Chinese government 47:03
Tencent is closely aligned with the CCP.
Tencent is reminded that if they stop being useful to the Chinese government, their power could be taken away.
In order to comply with China's legal and regulatory requirements, Tencent can process and handle private information without requiring user consent in certain situations.
The CCP reportedly has a direct line to the desks of Tencent product managers and are able to order deletions whenever they want or monitor specific accounts and specific phrases in both public and private posts.
Tencent stance is that they can comply with China's legal and regulatory requirements to process and handle private information without requiring user consent in certain situations.
Tencent has acquired or invested in companies outside China, building a huge international portfolio.
Tencent acquired parts of Reddit and Discord, becoming one of the largest shareholders of Tesla.
There are concerns that if Tencent has access to a company's data, so does the CCP, and through Tencent, they can subtly influence decisions in international companies, ultimately influencing Western culture.
Tencent mostly stays out of the way of international companies they invest in and just takes an equity percentage and then not get too involved.
Tencent has been accused of abandoning innovation and just essentially becoming a gigantic investment fund funneling money from its apps in China into promising companies in other countries rather than creating much that's new or original itself.
Tencent doesn't even try to build its brand that much internationally.
The gaming industry is estimated to have generated $176 billion of revenue in 2021, almost five times the box office of the movie industry, and Tencent is essentially the biggest player in the market.
Tencent invested in studios that make some of the biggest global titles such as League of Legends, Fortnite, World of Warcraft, Clash of Clans, PlayerUnknown's Battlegrounds, and the mobile version of Call of Duty.
Tencent partnered with Roblox to bring their games to the Chinese market.
Tencent's most important investments were buying 100% of Riot Games and 40% of Epic Games.
Tencent invests in international game studios, which have been extremely lucrative.
The acquisition of popular games by Tencent has brought some unwanted attention to the company.
Many fans noticed that after Tencent acquired some of these popular games, there seemed to be more upgrades and unlockable content within the game that required additional payment.
Tencent is accused of being greedy and pushing for more microtransactions like it's the norm in China.
Tencent's cloud hosting business has become very profitable, much like Amazon Web Services.
Tencent generated $86 billion in 2021 alone, with 35 billion of net profit.
The outbreak of COVID-19 was great for Tencent's revenue as people were at home using their services and playing their games more.
Political battles against Chinese-owned social media apps 01:03:50
Donald Trump began threatening to ban WeChat and other Chinese apps, citing concerns over national security.
In 2020, Trump signed executive orders banning TikTok and WeChat from operating in the US on grounds that the Chinese Communist Party could use them to steal users' private data, censor anything critical of China, and help spread disinformation.
Even with the Biden Administration, there are continued investigations into these Chinese apps and whether they are a national security risk that should be banned.
Tencent's vulnerability to the Chinese government 01:05:39
Tencent has made a lot of business battles, including political battles like with the US government, but there is one enemy they did not want: the Chinese government.
Rumors of a change in government policy began to spread, and then Chinese regulators suddenly stopped approving all new games from being released.
To appease the Chinese government, Tencent had to make big changes, including introducing facial recognition in their games and changing the nature of some of its games to ensure they aligned with the CCP's values.
Tencent realized that despite their huge power and wealth, they were still completely at the mercy of the Chinese government.
Jack Ma's company and the anti-trust investigation 01:08:19
In October 2020, Jack Ma's company, the Ant Group, was preparing for its IPO when Jack Ma publicly criticized China's traditional finance industry and its regulators.
Shortly afterwards, the Ant Group IPO was abruptly canceled, supposedly by order of the Chinese president himself.
Jack Ma's other company, Alibaba, became the subject of an anti-trust investigation with allegations of using anti-competitive monopolistic practices.
China had allowed big tech almost free reign for years, allowing Chinese businesses to thrive. They've got their surveillance tools like WeChat and enabled Chinese companies to invest internationally to give China some influence abroad.
However, the CCP felt that big tech, in general, had grown too powerful, and the government needed even more control to remind everyone who's really in charge.
The CCP wanted to send a message that even the wealthiest and most influential Chinese entrepreneurs and companies are not above the party or law.