The Tencent vs government Puzzle

Tencent is the largest internet company in China and it might be also the most misunderstood one. I chatted with a friend in Hong Kong yesterday. And she asked whether Chinese government will suppress Tencent. This is not the first time I heard about such query. A few months ago, a hedge fund manager asked whether Chinese government would take control of Tencent, given it has such an important position in China. “It has more users than China Mobile,” he said.

Yes, given Chinese government like to control everything important, the doubt is reason.

But, I don’t think Chinese government has anything to gain by taking over or suppress Tencent, if control is what it wants.

All the large internet companies in China are working closely with Chinese government, in term of political control, sex, violence and different kind of censorships. I once chatted with a leading online video operator. He said in order for them to get the licence, they talked with the government for over a year. A key point the government want to make sure is how well they can censorship the materials posted by their users. How they use technology, as well as human editors, to screen out problematic materials.

Tencent, obviously, will be following similar guild lines from government to make sure no political sensitive issues can spread among its 600 million plus registered users. (That is almost half of Chinese population.)

Another friend once told me, to run a instant messaging service, actually, the message can go directly from one user to the other, without going through a central server of the operator. But in Tencent’s case, messages on QQ pass through its central server before going to the other users. This obviously provide a good channel for control and censorship.

So if Tencent is doing a great job, why replace it? And if Tencent’s QQ fail, the most to gain will be Microsoft’s MSN. (If fact, during Tencent’s dispute with 360 Guard, number of MSN users shoot up in China.) And MSN would not be as cooperative as Tencent, regarding to government’s requests.