(Reuters) – Pony Ma, the unobtrusive founder of Tencent Holdings, China’s largest social media and video games company, met with antitrust watchdog officials this month to discuss his group’s compliance, three people with direct knowledge of the case to Reuters.
The meeting is the most concrete indication so far that China’s unprecedented antitrust crackdown, which began late last year with billionaire Jack Ma’s Alibaba business empire, could soon target other Internet giants.
Beijing has vowed to strengthen oversight of its major 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.
Tencent, whose WeChat mobile messaging and payments app is ubiquitous in China, is expected to be next for tighter antitrust investigations, the three people said.
The news of the meeting, which has not been reported, features on Tencent’s quarterly results on Wednesday. Analysts expect a 42% increase in earnings, according to data from Refinitiv, although the investor’s focus will be on regulatory developments.
Pony Ma, who rarely gives media interviews and has been out of the public eye for over a year, was in Beijing this month for China’s annual parliamentary meeting and visited the office of the State Administration of Market Regulation (SAMR) the week before , the people said.
Tencent’s founder, ranked this month as China’s second richest person with a net worth of $ 74 billion, is a parliamentary delegate from Guangdong Province, where the company is headquartered.
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 Reuters requests for comment.
At the meeting, the two sides discussed how Tencent could better enforce antitrust rules, two of the people said.
Wu Zhenguo, the head of SAMR’s anti-monopoly office, who was also present at the meeting, expressed concern about some of Tencent’s business practices and asked the group to comply with antitrust rules, one of them said.
SAMR is currently gathering intelligence and investigating WeChat’s monopolistic practices, and how the super app may have crushed fair competition and squeezed out smaller rivals, two of the people said.
All sources declined to be named due to the sensitivity of the case.
Tencent shares fell as much as 1.7% in a weaker Hong Kong market, hitting the day’s lowest after the Reuters report.
CORRECTIVE MEASURE
The meeting between Pony Ma, who is also Tencent’s chairman and general manager, and antitrust officials came a few days after he called for tighter governance of the internet economy at China’s parliamentary rally in Beijing.
Pony Ma’s discreet public profile is in stark contrast to that of unrelated fellow entrepreneur Jack Ma at Alibaba, whose public criticism of Chinese regulators sparked a chain of events that resulted in the last minute shutdown of fintech partner’s IPO. Ant Group in November last year.
One of the people said that Tencent had not been officially notified by SAMR of any investigation into its activities, but expects to hear from the regulator soon.
“As one of the big two in China, it is perfectly normal for Tencent to be concerned about being targeted,” said You Yunting, a lawyer at DeBund Law Offices in Shanghai, referring to Pony Ma’s meeting with regulatory officials.
“There are two concerns for Tencent, an assessment of a concentration of companies could affect acquisition deals, while investigations and disputes over abuse of dominant market positions could hurt the advantage of its platforms.”
To mitigate the impact of possible actions against it, Tencent has made efforts to take corrective action.
Tencent has to compromise on a plan to merge the country’s two top video game live streaming sites to address antitrust issues, Reuters reported Tuesday.
In a separate deal, the company, which had 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 became the largest shareholder.
Earlier this month, however, Tencent acquired 5% of Century Huatong and instead became the second-largest shareholder, seeking a potentially lengthy and complicated antitrust approval process, the two people said.
Reporting by Pei Li, Cheng Leng and Julie Zhu; Adaptation by Sumeet Chatterjee and Richard Pullin