Tencent’s market cap had fallen by more than $60 billion (£42 billion) by Monday, as investors worried about increased regulatory scrutiny.
According to media reports, Alibaba, a rival tech company, could be forced to sell some of its media properties as a result of the crackdown. Chinese authorities have indicated that they would take a stricter stance against tech companies.
China’s State Administration for Market Regulation (SAMR) announced on Friday that it had fined 12 firms for breaking anti-monopoly laws in ten transactions.Tencent, Baidu, Didi Chuxing, SoftBank, and a ByteDance-backed firm were among the firms, according to the SAMR.
Investors appear nervous that Tencent may be the next business threatened by Chinese regulators, who are becoming more involved in how global tech companies work.
Investors appear nervous that Tencent may be the next business threatened by Chinese regulators, who are becoming more involved in how global tech companies work. China’s President Xi Jinping directed regulators to expand regulation of internet firms, crack down on monopolies, and encourage fair competition on Monday, according to state broadcaster CCTV.
Ant Group’s stock exchange launch was hindered back in October
Chinese regulators intervened in October to prevent Alibaba-backed Ant Group from launching its stock exchange, which was supposed to be the year’s largest. Jack Ma, the founder of Alibaba, is known as one of China’s most influential entrepreneurs. However, after speaking out against China’s regulatory approach to the finance technology market, his fortunes have fallen.
Since then, regulators also opened an antitrust investigation into Alibaba, China’s largest e-commerce site, led by Jack Ma. Last month, new regulations were enacted to prevent China’s e-commerce industry leaders from exploiting their dominant market position.
Pony Ma’s not so good encounter with the Chinese regulators
With over a billion users on its WeChat messaging app, Tencent is one of China’s largest tech firms. Pony Ma, the company’s founder, is one of China’s wealthiest citizens.Tencent is also a major player in China’s digital payments industry, with its payments app WeChat Pay vying for market share against Ant Group’s AliPay.
According to reports in the media, Ant and Tencent could be forced to form separate holding companies to house their banking, insurance, and payment services. Tencent’s most lucrative industry is gaming, but the firm also has investments in music and films.