The Secret Chinese Company That Owns Everything

Tencent, the giant octopus 00:00

• Tencent is a Chinese conglomerate that is worth more than Facebook, MasterCard, and Samsung combined.
• Tencent has its tentacles in almost every industry worldwide, making it difficult to define the company's primary function.
• Tencent's mascot is a friendly-looking penguin, but a giant octopus would accurately embody the conglomerate.

WeChat and Tencent's domination in China 01:16

• WeChat, an app created by Tencent, is dubbed 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, dominating every aspect of life in China, from banking, gaming, shopping, to social media.
• WeChat is essentially Facebook, PayPal, WhatsApp, Netflix, Google, Spotify, Uber, Yelp, Tinder, Zoom, YouTube, Deliveroo, Amazon, and more, all rolled into one single app.
• The Chinese government has access to all data on WeChat, making it one of the most powerful surveillance tools ever created.
• Private messages and images that are sent through Tencent's apps like WeChat are scanned to see if they need to be censored.
• The CCP has thousands of members inside Tencent, including party officials on the Tencent executive board who can influence decisions.
• Tencent has been allowed to monopolize entire industries in China and use brutal tactics to wipe out competitors without any interference from regulators.
• The CCP has used WeChat for population control, assigning color codes to determine whether people were healthy and what they were eligible for, like leaving their homes.

Tencent's expansion abroad 05:12

• Once Tencent built its monopoly in China, it began expanding abroad and invested heavily in companies like Reddit, Tesla, Discord, Spotify, Snapchat, and Universal Music.
• Tencent is the largest gaming company in the world, with revenue significantly higher than any competitor.
• Tencent's payment division is nearly as big as PayPal's entire business, and WeChat Pay generates over 1 billion payment transactions per day, more than Visa and MasterCard combined.
• Tencent is also huge in esports and is even now involved in making Hollywood movies like Men In Black.

Amnesty International's report 03:48

• 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.

Conclusion

• 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.

WeChat Security Threat 07:54

• Multiple governments from the US to India have called WeChat a security threat.
• Others have suggested that it's a monitoring weapon in your pocket.
• The Trump administration banned the popular social media apps TikTok and WeChat from US app stores.
• President Trump issued an executive order last month targeting the app as a security threat.

Tencent's Story 08:18

• 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.

Who is Pony Ma? 10:36

• Pony Ma is the founder and CEO of Tencent.
• Unlike his arch-nemesis Jack Ma, the founder of China's other dominant company Alibaba, Pony is introverted and simply doesn't like being in the spotlight.
• Tencent tries to walk the tightrope of keeping both China and the rest of the world happy, and since that's very difficult to balance, Pony opts to not speak out publicly much at all.
• It's better to just say nothing rather than cause controversy and headlines.

Tencent's Beginning 12:31

• Pony was browsing online and stumbled across something called ICQ, an internet chat platform that at the time was pretty groundbreaking.
• In 1998, Pony and his Tencent co-founders, which was three of his friends from school, launched their own duplicate chat service that was more catered to the Chinese market.
• Tencent copied ICQ, and their chat product was so much of a rip-off that they literally called their service OICQ.
• The practice of cloning popular Western services was common in China, and Tencent's chat product was just one of many.

Tencent's Early Days 13:31

• Tencent was founded by Pony Ma in the late 1990s.
• Tencent's initial product was an internet chat service called OICQ, which was similar to the popular ICQ chat service.
• Initially, Tencent faced many challenges as they had no money and had to work in a small and chaotic office.

Tailoring the Chat Service for the Chinese Market 13:47

• Tencent focused on tailoring their chat software to fit the Chinese market.
• They made their chat software files smaller to enable faster download speeds in China.
• Unlike other chat software, Tencent's chat software allowed strangers to connect with each other.

Early Struggles 14:20

• When Tencent first launched OICQ, very few people knew about it.
• To get people to use the service, Pony had to talk to people in the chat room and even pretended to be a girl sometimes.
• Initially, Tencent's focus was on developing a software that connected pagers, but that idea was going nowhere.

Growth and Legal Troubles 16:06

• OICQ eventually grew to millions of users, but Tencent wasn't making any money from it.
• In 1999, AOL sued Tencent for violating intellectual property laws, demanding that Tencent stop using the name OICQ.
• Tencent didn't have the money to fight the lawsuit, and they didn't have any revenue sources.
• Pony tried to sell the company, but nobody wanted to buy it.

Venture Capital 16:48

• After learning about venture capital, Pony began contacting VC firms and managed to get a meeting with China's most well-known VC fund, called IDG Capital.
• In the pitch, Pony used brutal honesty, admitting that Tencent wasn't making any money and that the future was uncertain.
• Despite the lack of profitability, IDG Capital agreed to invest $2.2 million for 40% of Tencent's business, which saved the company.

Rebranding and Monetization Struggles 18:05

• Tencent was forced to shut down OICQ and rebrand their chat app as "QQ" to avoid legal issues.
• Despite having lots of users, Tencent struggled to monetize their chat software.
• They tried placing banner ads on QQ, selling QQ's chat software to companies, and charging a small membership fee, but all of these failed.

Tencent's Expansion into the Gaming Market 24:32

• Tencent realized that many people used QQ while playing games, so they decided to expand into acquiring and building games of their own.
• Within just a year of integrating games into QQ, Tencent added another $50 million in annual revenue.
• Tencent's quick expansion into the gaming market was aided massively by the fact that they were a Chinese company as the internet in China is restricted.

Microsoft's Challenge to Tencent's QQ 21:27

• In 2004, Microsoft launched a chat service called MSN, which ended up being a direct competitor to Tencent's QQ.
• MSN was run by Microsoft, which was a big threat to Tencent as Microsoft had vast wealth and resources.
• Microsoft decided to double down on its efforts in China, given it was such a massive market.
• MSN's decision-making was much slower because of their bureaucratic corporate hierarchy, which meant every big decision had to be signed off by their American headquarters.
• Initially, MSN kept all their data back on U.S servers, which meant Tencent's QQ chat service, which ran on local Chinese servers, was much faster to use.
• Despite having greater resources, MSN lost the fight to Tencent as China hadn't been a main priority of theirs.

Tencent's Avatar Feature Inside QQ 19:19

• Some Tencent employees discovered a Korean website called sayclub.com, which allowed people to create personalized avatars with customizable appearances and clothing.
• Tencent decided to copy this popular feature and launch their own avatar feature inside QQ called Show.
• For a small fee, you could buy designer clothes, accessories, and styles for your character while buying things for your avatar was cheap, equivalent to just a few cents.
• This feature quickly became very popular, especially amongst younger users, and your avatar became a signal of your status.

Tencent's Dominance of the Chat Market in China 23:10

• After defeating Microsoft, Tencent went on to completely dominate the chat market in China, passing half a billion users in late 2005.
• Tencent began adding several other features into QQ, like the ability to access news.
• Seeing how quickly Tencent was growing, a South African company called Naspers decided to invest $32 million in Tencent and become their largest shareholder.
• This gave Pony the influx of cash he needed to begin the next stage of his plan.

Pony's Vision for Tencent 23:41

• Pony had a vision of being much more than just a popular chat platform but instead a whole network of integrated internet services.
• This would make it much harder for anyone else in the future to try and compete with Tencent.
• Tencent began adding several other features into QQ, like the ability to access news.

Pony Meets His Future Wife on QQ 20:29

• Pony met his future wife through QQ. For three months, he was chatting with a girl on there before they met in person
• Funnily enough, when they first started chatting on QQ, she had no idea she was speaking to the founder of the service.
• She reportedly messaged him asking, "who are you?" and he wrote back, "I'm penguin dad," a reference to the fact that Tencent's mascot was a penguin.
• But she just replied that "I'm penguin mum," and the relationship began from there, and six months after meeting in person, they were married.

Tencent's dominance in the Chinese market 25:01

• The Chinese government blocks access to many websites, including Facebook and YouTube, to promote local Chinese companies.
• Foreign companies have to partner with a local Chinese company to sell their products or services in China.
• Tencent takes advantage of this policy to quickly make a lot of money by licensing and distributing successful games from other countries in China.
• Tencent has a huge user base, which gives them leverage in negotiations with international companies.

Tencent's business tactics 26:01

• Tencent uses business tactics to wear down their partners during negotiations.
• One example is when they changed everything in the contract at the last minute during negotiations with American video game developer Zynga.

Tencent's game development 26:22

• Tencent makes some of its own games by replicating fairly simple games that were already working well elsewhere.
• Tencent's game development is low-risk as it uses game concepts that are already proven to work well in other countries.
• Tencent realized that people in China were not paying for games up front and were just sharing them for free. So, Tencent made the games free for everyone and made money through in-game sales instead.

Tencent's culture 27:20

• Most Chinese tech companies are notorious for their long work hours, and Tencent is no exception. The schedule is often referred to as the 996 schedule, meaning you work 9 AM to 9 PM six days a week.
• Tencent has a strict hiring process as Pony, the CEO, believes that five great players are better than a team of 50 who aren't fully committed.
• Everyone in Tencent is expected to innovate, and the company has a culture of actively monitoring the market for new apps and ideas.

Tencent's reputation as a copycat 29:06

• Tencent has a notorious reputation as a killer copycat.
• Tencent copied other companies, and other companies copied Tencent.
• Tencent's reputation fell so low that it was embroiled in a full-blown media controversy, and peers openly accused it of violating copyrights.

Tencent's battle with Kihu 29:41

• 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's Growth and Monopolistic Practices 30:47

• Between 2005 and 2010, Tencent's revenue grew from $200 million to $2.9 billion.
• Tencent continued expanding in China, opening up more internet services and leveraging its massive user base.
• Headlines such as "Tencent Empire Out of Control" started to appear due to its monopolistic practices.
• Tencent essentially banned its users from using a competitor's product.
• The Chinese government showed no interest in intervening, letting Tencent grow.
• Later, it became clear why.

Tencent's Shift to Investing 32:16

• Tencent began shifting its strategy towards investing in Chinese companies instead of directly competing against them.
• Tencent paid $448 million for 36.5 percent of China's third-largest search engine and merged their own search product into that.
• Tencent was now willing to back a champion instead of doing everything itself.
• Tencent's new strategy was almost to become a startup incubator.
• Tencent invested in businesses, took some of their equity, and built an ecosystem of connected companies.

Tencent's New Mobile Messaging App WeChat 34:52

• In 2010, mobile internet was beginning to rise in popularity very quickly.
• Tencent created three separate teams to work on a new mobile messaging app.
• Tencent was competing against each other and also competing against its desktop app QQ.
• Tencent's culture of internal competition is normal.
• In January 2011, Tencent launched WeChat, specifically made for mobile.
• WeChat was not a massive hit right away but started to gain traction in China.
• Tencent added a feature called "push-to-talk," which immediately became popular.
• WeChat was a copy of someone else's app called Talkbox.

Tencent’s Acquisition Strategy 36:09

• 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’s Expansion 36:35

• WeChat was gaining momentum in China and Tencent saw that it could be more than just a chat application.
• WeChat was launched in 2011, and by 2012 it had 100 million users, making it the fastest social media growth in history.
• WeChat was a mobile app, and it was always with people wherever they went, so Tencent realized that the amount of services they could connect to WeChat was limitless.

WeChat’s Features 36:45

• 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 Pay 38:23

• During the Lunar New Year in China, people charitably give away red envelopes and packets containing money.
• WeChat created a red packet function within their app, so people could digitally send red packets to others, which transferred real money to their accounts.
• This feature led Tencent to realize that mobile payments were the future and created WeChat Pay, their mobile payments platform for digitally transferring money.
• WeChat Pay was not only used to send payments to other people but also as a way to pay for things in shops and anything else where money needed to be sent or paid.

Mini Programs 39:57

• 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's data collection and surveillance 47:53

• Tencent feeds data to China's social credit scoring system which can affect what citizens can do.
• Information like payment history, real-time location, and who you're associated with can allow the government to create an incredibly detailed picture of who you are, what you buy, and how you behave.
• This allows the government to give you a score of how trustworthy you are as a citizen.
• Chinese citizens are constantly monitored by facial recognition cameras that are able to instantly put a face name.
• The Chinese are ranked by aggregating data gathered by banks, private companies, and the state to rate if someone's a good or bad citizen.
• Scores bring benefits for people with high scores and low scores lose rights.
• People considered untrustworthy are shamed and plastered with their details, even their addresses, across big screens.

Examples of Tencent's censorship and control 48:55

• Tencent has to employ hundreds, possibly thousands, of their own sensors whose job it is to block anti-government posts.
• Tencent then began deleting lots more posts and suspending accounts that stepped out of line.
• There are multiple examples of creators who had hundreds of thousands of fans but after making one comment the CCP didn't like, their account was deleted without warning and their income gone.
• Every move and comment on WeChat is documented something which the CCP openly reminds people of.
• Whatever Tencent can see, the Chinese government can see.

Tencent's international appeal 50:51

• Research from Citizen Lab found that the Chinese government does monitor and censor confidential information sent by Tencent's apps even from users outside of China.
• Any taboo issues like mentions of Tiananmen Square or Tibet are censored on Tencent regardless of whether you're in China or not.
• Every country has different requirements, and for the app to be effective elsewhere, every country would need their own WeChat version with services specifically suited to their country.
• Since China is such a massive market, Tencent hasn't had much incentive to further expand beyond China.

Tencent's focus on China 52:32

• Tencent is a massive Chinese conglomerate with a focus on the Chinese market.
• With a population of over 1.4 billion people, Tencent saw more sense in doubling down on the Chinese market where they already had momentum.
• This strategy allowed Tencent to avoid diverting their resources to start from scratch in other countries.
• However, this also meant that Tencent did not get the first mover advantage in other countries.

WeChat's struggle to expand 52:52

• WeChat, Tencent's flagship product, did not work well abroad due to various reasons.
• Firstly, there were already many established companies that had their apps ingrained in people's lives.
• Secondly, historically, Chinese tech companies struggle outside of China, just as American companies struggle inside China.
• Despite this, there has been one notable exception recently, TikTok, which has managed to go global and become a massive hit.

TikTok vs Tencent 53:35

• TikTok is the exception to the rule that Chinese tech companies struggle outside of China.
• Tencent was threatened by the success of TikTok and immediately assembled a large team to recreate a similar app within WeChat.
• Tencent also banned TikTok from advertising on their platforms and started blocking links or mentions of TikTok on its platforms, like WeChat.
• Pony Ma, the founder of Tencent, was criticized by Zhang Yiming, the founder of TikTok's parent company, for making an almost clone version of TikTok after banning it within WeChat.
• However, Tencent's tactic did not work, as TikTok's machine learning algorithm accurately showed users the content that would keep them on the platform longer.

Tencent's strategy for world domination 56:37

• Tencent's core competitive advantage is that they have huge amounts of traffic and money, far more than any competition.
• Tencent's plan is to attract other businesses to launch their own mini-programs via WeChat, so they can leverage some of WeChat's traffic.
• Tencent invests money into the businesses that are doing the best, using the data of which mini-programs people are using, how often, and how much money they are spending.
• Tencent then artificially gives more traffic to the companies they invest in, thus making them even more money, which they can also reinvest in even more companies.
• Tencent can cherry-pick the best mini-programs, invest in them, boost their popularity, and practically guarantee their investment as a big success.
• Tencent has a significant stake in DD, which is China's equivalent of Uber, and through WeChat, Tencent can promote DD more, giving it an unfair advantage and increasing the value of its investment.

Tencent Diversifies Away from China 58:30

• Tencent uses the money generated from its cash cows in China to invest in companies abroad, diversifying its portfolio away from China.
• By investing in hundreds of companies outside China, Tencent has built a large international portfolio.
• Diversification is important for Tencent as it is entirely based in China and is at the mercy of the Chinese government.
• Tencent has acquired or invested in many companies outside China in all different industries.

Tencent's International Investments 58:43

• 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.

Tencent's Investment in Gaming 01:00:13

• 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 Honor of Kings 01:00:34

• Tencent's game Honor of Kings is so popular in China that there's a black market where people pay for others to play the game for them to improve their ranking.
• Most of Tencent's original games were overly tailored to the Chinese market, often featuring Chinese propaganda to appease the CCP.
• Tencent wanted to turn their most popular title, League of Legends, into a mobile game to make even more money from that, but the game developers didn't want to do this.
• Tencent went behind their back and made a rip-off of their game, which is where Honor of Kings came from.
• Tencent used notable League of Legend players to promote their new game, which caused many people to assume Riot Games was actively involved with this new game even though they weren't.
• By the end of 2017, Honor of Kings was the most popular mobile game in China.

Tencent's Monetization Strategies 01:03:05

• Tencent is great at finding ways to monetize.
• Tencent's video platform, essentially their version of Netflix, now inserts extra ads into movies and TV series that weren't there in the original, such as adding extra billboards.

Tencent's cloud hosting business 01:03:15

• 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.
• Jack Ma disappeared from the public eye.

Tencent and Alibaba's rivalry 01:09:08

• Tencent and Alibaba have been rivals for years in various industries in China as the country's two most dominant conglomerates.
• Jack Ma, the founder of Alibaba, spoke out against the Chinese government and faced immediate punishment.
• Pony Ma, founder of Tencent, may have thought he had won, but Jack's actions would be the Domino that began Tencent's downfall as well.

Crackdown on big tech in China 01:09:27

• The Chinese government was not just going after Jack Ma and his companies but all of China's big tech giants.
• The CCP expressed national security concerns about the data these companies like Tencent have, as letting any single corporation dominate too much could be a risk for China.
• Fines were imposed on several large Chinese tech companies, including Tencent, for being monopolies. The fines added up to billions of dollars.
• The government introduced new regulations to limit the power of some of these tech companies.

Impact on Tencent 01:10:45

• The stock prices of Chinese businesses began to plummet, and it's estimated that 1.5 trillion dollars of value was wiped off Chinese tech companies' valuations due to the crackdown.
• Tencent, in particular, has lost over 500 billion dollars off its market cap, more than half its value since the crackdown began.
• Tencent faced anti-monopoly investigations and big fines. Their new games were no longer approved, and new deals they wanted to make were blocked.

Reasons for the crackdown 01:11:20

• 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.

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• Shipstation is a platform that helps smaller e-commerce businesses compete on shipping prices and delivery times by offering the best discounts in the industry.
• Shipstation integrates everywhere you sell online, including Amazon, Etsy, eBay, Shopify, and more, giving you one easy dashboard to manage all your orders in one place.

Summary and Preview 01:14:27

• Tencent has lost over $500 billion in market cap since the crackdown began.
• The Chinese government has been cracking down on big tech, imposing fines for being monopolies and introducing new regulations to limit their power.
• Shipstation helps smaller e-commerce businesses compete on shipping prices and delivery times.
• In the next part, we'll talk about the future of Tencent and what could happen to the company as a result of the crackdown.

Tencent's history and growth 01:14:34

• Tencent started as a chat software company and then diversified into social media platforms.
• They used their resources to jump into the wave of mobile internet growth.
• Tencent diversified into other lucrative opportunities like gaming and video.
• Tencent's approach to rivals was to clone their product or service and then drive vast amounts of traffic to it.
• If that didn't work, they'd buy out the company instead or buy a large stake in it.
• Tencent continually kept reinvesting profits to either clone or buy other services and often swallow them into WeChat.
• Tencent had a whole ecosystem of influential companies.
• Tencent's ties to the Chinese government allowed them to often use anti-competitive tactics and expand rapidly.

Tencent's international investments 01:15:21

• Tencent's ties to the Chinese government and its apps being used for surveillance and censorship limited the appeal of Tencent outside of China.
• Tencent began investing in international companies instead, including many of the biggest game developers and companies such as Reddit and Discord.
• Tencent became one of the largest companies on the planet.

Recent challenges faced by Tencent 01:15:44

• There have been layoffs over the last few years, and Pony recently blasted employees for being lazy.
• Tencent's valuation began to fall due to China's crackdown on big tech companies.
• Despite the crackdown, Tencent is still a massive company worth hundreds of billions of dollars with significant influence.
• Tencent will continue investing in companies abroad.
• Tencent had some good news in September 2022 when it got its first new game license approved after over 15 months.

Tencent's alignment with the CCP 01:16:35

• Tencent will have to be even more closely aligned with the CCP to ensure there are no further issues.
• Tencent partnered with the CCP's propaganda Department to help promote their worldview and socialist values.
• Tencent has also released the game "Clap for Xi Jinping," where you literally just clap for the Chinese president to show your appreciation.

Tencent's future 01:17:42

• Tencent may have to catch the next wave, whatever that may be, to stay ahead.
• Some believe the metaverse could be a big part of our future, and Tencent is arguably in a better position for building the metaverse given their dominance in gaming and Virtual Worlds already.
• The CCP probably wouldn't want a metaverse that they couldn't have a lot of oversight in, so that probably limits Tencent's chances of building a global metaverse.
• The eternal struggle for Tencent to keep China and the rest of the world happy will continue.