Tencent and its hyper-popular messaging app WeChat have become Trump's latest target. Here's how the company became a $69 billion behemoth that has a stake in everything from 'Fortnite' to Hollywood blockbusters.

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Avery Hartmans,Ben GilbertAug 7, 2020, 22:55 IST
Tencent and its hyper-popular messaging app WeChat have become Trump's latest target. Here's how the company became a $69 billion behemoth that has a stake in everything from 'Fortnite' to Hollywood blockbusters.

People visit Tencent's booth at the World 5G Exhibition in Beijing.Reuters

  • An executive order issued Thursday night by President Donald Trump bars US companies and individuals from making any transaction with WeChat, a social media app owned by Chinese giant Tencent.
  • Tencent isn't a household name in the US, but it's one of the most valuable companies in the world and has a stake in everything from blockbuster films to gaming.
  • In fact, Tencent is the biggest video game company in the world. It owns US game studio Riot Game and has a substantial stake in Epic Games, the company behind "Fortnite."
  • Run by billionaire Pony Ma, Tencent is now worth around $69 billion — more than Berkshire Hathaway and Johnson & Johnson, and nearly as much as Alibaba.

President Donald Trump on Thursday issued an executive order aimed at two Chinese-owned apps: ByteDance's hyper-popular TikTok, and WeChat, the messaging app owned by mega-conglomerate Tencent.

The latter company likely isn't a household name for many Americans, but it's one of the biggest firms in Asia and has a stake in everything from video games like "Fortnite" to blockbuster films, including "Men in Black: International," "Top Gun: Maverick," and "Terminator: Dark Fate."

Plus, its messaging apps, WeChat and QQ, are used by more than two-thirds of Chinese people, according to Bloomberg.

The new executive order bars American companies and individuals from making "any transaction" with WeChat over concerns about how much user data the app collects and whether the Chinese government is able to access it. Though it's not clear how the order would be enforced or whether it's legal, it could have far-reaching implications for the app's users in the US, as well as Tencent.

Here's how Tencent got its start in the late '90s and grew to become one of the most powerful companies in the world.

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Tencent was founded in 1998 by Ma Huateng — better known as Pony Ma — along with three of his classmates from college and a friend.

Tencent was founded in 1998 by Ma Huateng — better known as Pony Ma — along with three of his classmates from college and a friend.
Tencent founder and CEO Pony Ma in Wuzhen, China, in November 2018. Jason Lee/Reuters

Today, Ma is one of the richest people in the world with a net worth of $55.5 billion, according to Bloomberg's Billionaires Index.

While Ma oversees the company, Tencent's day-to-day operations are managed by its president, Martin Lau, according to Bloomberg.

Tencent has a hand in everything from entertainment to financial services to comics. But perhaps its most powerful tool is WeChat.

Tencent has a hand in everything from entertainment to financial services to comics. But perhaps its most powerful tool is WeChat.
A WeChat logo is displayed inside TIT Creativity Industry Zone in Guangzhou. Reuters

While WeChat began as a messaging app, it's evolved into much more than that.

Tencent launched WeChat in 2011 with the goal of allowing users to send messages over the internet, much like WhatsApp. Since then, Tencent has added features like video calling, gaming, shopping, the ability to send mobile payments, and the option to hail a taxi or order food.

The app is a major part of everyday life in China, to an extent that users outside the country can't fully comprehend.

"For all intents and purposes WeChat is your phone, and to a far greater extent in China than anywhere else, your phone is everything," analyst and Stratechery founder Ben Thompson wrote in 2017. "There is nothing in any other country that is comparable, particularly the Facebook properties (Facebook, Messenger, and WhatsApp) to which WeChat is commonly compared."

But WeChat has also become a surveillance tool, according to experts. Researchers at Citizen Lab recently found that WeChat has been monitoring sensitive keywords and images sent by users overseas and using the findings to help it train its censorship algorithms in China.

The app also collects a substantial amount of information from its users, including their face and voice, leading some to worry that it could become an instrument for the Chinese government.

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In recent years, Tencent has become the world's largest video game company through its tactic of investing in or outright buying up major game makers.

In recent years, Tencent has become the world's largest video game company through its tactic of investing in or outright buying up major game makers.
An attendee stops to text next to Epic Games' Fortnite sign at E3, the annual video games expo in Los Angeles. Reuters

Tencent outright owns Riot Games, the Los Angeles-based studio responsible for two of the world's biggest games: "League of Legends" and "Teamfight Tactics."

Tencent also owns a 40% stake in Epic Games, the North Carolina-based company behind "Fortnite," the Epic Games Store, and Unreal Engine, the software suite that powers a huge portion of gaming. And it owns the majority of Supercell, the Finnish mobile gaming powerhouse behind "Clash of Clans," "Clash Royale," and "Brawl Stars."

On top of that, Tencent has minority stakes in "Call of Duty" publisher Activision and "Assassin's Creed" publisher Ubisoft.

And for American companies looking to get their games in front of the Chinese market, Tencent also operates as a gatekeeper of sorts. For example, when Activision wants to bring "Call of Duty" to China, it partners with Tencent. Same goes for EA, Sony, and Ubisoft.

Moreover, Tencent operates WeGame — the Chinese equivalent of Steam, the world's largest PC gaming storefront. There's one major difference between Steam and WeGame: Tencent's version of Steam has far more users.

All of that combined means Tencent is the most powerful gaming company in the world.

Tencent has its own production company, Tencent Pictures, which has invested in multiple US films.

Tencent has its own production company, Tencent Pictures, which has invested in multiple US films.
Paramount Pictures/ YouTube

Launched in 2015, Tencent Pictures has been involved in high-profile Hollywood projects, including:

  • "A Beautiful Day in the Neighborhood"
  • "Terminator: Dark Fate"
  • "Top Gun: Maverick"
  • "Venom"
  • "Wonder Woman"
  • "Kong: Skull Island"
  • "Men in Black: International"
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It's a major investor, with holdings in Tesla, Reddit, Discord, and Snap. Tencent has invested in more "unicorn" startups than Japanese investment giant SoftBank, according to Quartz.

It's a major investor, with holdings in Tesla, Reddit, Discord, and Snap. Tencent has invested in more "unicorn" startups than Japanese investment giant SoftBank, according to Quartz.
Getty

Source: Quartz, Bloomberg, Pitchbook

Tencent also has a stake in streaming, music, and comics.

Tencent also has a stake in streaming, music, and comics.
People walk by the NBA flagship retail store on October 9, 2019 in Beijing, China. Kevin Frayer/Getty Images

The company has signed major distribution deals with Sony Music, Warner Music Group, and YG Entertainment, which allow Tencent to distribute their music catalogs online and promote artists from those labels on Tencent's platforms, according to Reuters.

And in 2015, Tencent signed a deal worth $700 million with National Basketball Association, making the company the NBA's exclusive digital partner in China. The deal allowed Tencent to carry live games, the NBA draft, the NBA Finals, and the All-Star Game, Bloomberg reported at the time.

Tencent also has a massive comics and animation business, with its app pulling in 120 million monthly active users, according to TechCrunch.

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Tencent is currently valued around $69 billion, making it the eighth-largest company in the world in terms of market value, according to Bloomberg.

Tencent is currently valued around $69 billion, making it the eighth-largest company in the world in terms of market value, according to Bloomberg.
Tencent headquarters is seen at Nanshan Hi-Tech Industrial Park in Shenzhen. Reuters

Tencent is more valuable than Berkshire Hathaway and Johnson & Johnson, and is edging in on Alibaba.

While Tencent is based in Shenzen, China, it has offices in Amsterdam, Bangkok, Tokyo, Palo Alto, California, and elsewhere around the world.

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