Tencent hopes to negotiate with the US government to have it removed from a blacklist of firms believed to have ties with the Chinese military.
In late 2020, then US president Donald Trump signed an executive order to prevent US companies from investing in any firms with ties to the Chinese military.
While not technically a form of sanction, this list of Chinese entities is part of the US’s efforts to counter Beijing’s allegedly abusive business practicesand limit their influence in the United States.
What does any of this have to do with video games? Well, with Trump set to take office again in a few weeks, the biggest games company in the world, Tencent, has found itself added to the Pentagon’s blacklist.
That isn’t hyperbole, by the way. Tencent is a massive media conglomerate and owns many developers and publishers, including Riot Games and its League Of Legends franchise.
It also has investments in many other games companies across the world, including the likes of Epic Games and Ubisoft. There’s even been chatter of Tencent buying out the latter, after their recent troubles.
Tencent also owns WeChat, China’s most popular social media app, which Trump vowed to ban in the US during his first presidency. However, this never went anywhere since his successor, Joe Biden, rescinded the order in 2021.
Naturally, Tencent has denied having any such involvement with the Chinese military. ‘We are not a military company or supplier,’ reads a statement provided to Bloomberg.
‘Unlike sanctions or export controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding.’
That said, Bloomberg reports that Tencent’s stock did drop by 7% following the news. Simply being on the list could also discourage US businesses from working with Tencent and potentially scupper any further investment opportunities.
In Beijing, a spokesperson for China’s Foreign Ministry was far more critical about the recent additions to the list, which includes not just Tencent but battery manufacturer CATL as well.
‘We urge the US to immediately correct its wrongdoings and end the illegal unilateral sanctions and long-arm jurisdiction on Chinese companies,’ said spokesman Guo Jiakun.
It’s not impossible for Tencent to be removed from the Pentagon’s list. Other Chinese firms have managed it before. For example, as reported by Reuters, phone company Xiaomi had the decision reversedin 2021… though not until after it threatened a lawsuit against the US government.
If Tencent’s negotiations fail, it could very well be incentivised to pursue similar legal action, especially if its businesses are severely hampered.
It’s too soon to tell what sort of effect this could have on the gaming side of things, but it’s not the only impact a second Trump presidency could have on the industry.
This past November, Trump proposed tougher tariffs on imported goods, which risks making video game consoles more expensive to buy. This could also potentially be the death blow for physical games and lead to digital games becoming more expensive too.
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