Tencent boss meets China anti-trust officials as scrutiny widens: sources

Hong Kong

PONY Ma, the low-profile founder of Tencent Holdings, China's biggest social media and video games company, met anti-trust watchdog officials this month to discuss compliance at his group, said three people with direct knowledge of the matter.

The meeting is the most concrete indication yet that China's unprecedented anti-trust crackdown, which started late last year with billionaire Jack Ma's Alibaba business empire, could soon target other Internet behemoths.

Beijing has vowed to strengthen oversight of its big tech firms, which rank among the world's largest and most valuable, citing concerns that they have built market power that stifles competition, misused consumer data and violated consumer rights. Tencent, whose WeChat messaging and payment mobile app is ubiquitous in China, is expected to be the next in line for sharper anti-trust inquiries, said the sources.

News of the meeting, which has not been reported, comes ahead of Tencent's December quarter results on Wednesday. Analysts expect a 42 per cent profit rise, showed Refinitiv data, although the investor focus will be on regulatory developments.

Mr Pony Ma, who seldom 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 State Administration of Market Regulation (SAMR) office the week before last, said the sources.

The Tencent founder, ranked this month as China's second-richest person with a US$74 billion fortune, is a parliamentary delegate with Guangdong province, where the company is headquartered. Tencent requested the meeting with SAMR deputy head Gan Lin and other senior officials, said the sources. Tencent and SAMR did not respond to Reuters requests for comment.

At the meeting, the two parties discussed how Tencent could better comply with anti-trust rules, two of the sources said. Wu Zhenguo, the head of SAMR's anti-monopoly bureau, was also at the meeting and expressed concern about some of Tencent's business practices. He asked the group to comply with anti-trust rules, one of the sources said.

SAMR is currently gathering information and looking into monopolistic practices by WeChat, and how the super app has possibly squashed fair competition and squeezed smaller rivals, two of the sources said. All the sources declined to be named due to the sensitivity of the matter.

Tencent shares dropped as much as 1.7 per cent in a weaker Hong Kong market to touch the day's lowest level after the Reuters report.

The meeting between Mr Ma, who is also Tencent's chairman and chief executive, and the anti-trust officials came a few days after he called for tighter governance of the Internet economy at China's parliamentary meeting in Beijing. His discreet public profile is in sharp contrast to that of unrelated fellow entrepreneur Jack Ma at Alibaba, whose public criticism of China's regulators triggered a chain of events that resulted in the last-minute halting of fintech affiliate Ant Group's US$37 billion initial public offering (IPO) in November.

One of the sources said Tencent had not been officially notified by SAMR of any investigation into its activities, but is expecting to hear from the regulator soon.

You Yunting, a lawyer with Shanghai-based DeBund Law Offices, said: "There are two worries for Tencent: a concentration of undertakings review could impact acquisition deals, while investigations and litigations on abuse of dominant market positions could hurt the advantage of its platforms." To cushion the impact of any potential moves against it, Tencent has been scrambling to take corrective action. It is having to offer concessions in a plan to merge the country's top two video-game live-streaming sites in order to resolve anti-trust concerns, Reuters reported earlier. REUTERS