China’s Tencent Suspends New Registrations for WeChat
Chinese internet giant Tencent said on Tuesday it had temporarily suspended new user registrations for its hugely popular WeChat app, raising fears of further regulatory pressure even as it insisted the outage was the result. a technical upgrade.
Tencent said in a statement that the shutdown, which only affected new users and groups signing up for the app, would be completed in early August and was part of a patch to its security technology.
The timing of the suspension left investors uneasy, with growing fears that a regulatory rampage targeting the tech sector could severely affect Tencent, China’s largest internet company. By far the company’s most important product, WeChat dominates Chinese social media, allowing users to do everything from sharing photos and chatting to paying for coffee and bills.
Shares of Tencent closed nearly 9% lower in trading in Hong Kong. Overall, it’s been a tough day in Chinese equity markets, with the Hang Seng Index in Hong Kong down 4.2% and the Shanghai Composite down 2.5%, amid concerns over Beijing’s regulatory crackdown.
So far, Tencent has managed to avoid the worst of a nine-month string of Chinese government scrutiny of the high-flying tech sector that has led to multibillion-dollar fines, service suspensions applications and falling stock prices for its rivals as well. as companies in which it has invested. In the last month alone, Chinese authorities have demanded security reviews for internet companies seeking to list their shares overseas and have barred tutoring companies, many of which operate online, from making a profit.
Tencent’s worst problem with Beijing came from a company it invested in, the ride-sharing company Didi. Regulators opened an investigation into the company this month, ultimately ordering its apps out of mobile stores until the investigation is completed. The company’s shares have fallen more than 40% since their IPO late last month.
In its statement on Tuesday, Tencent sought to minimize the suspension, but acknowledged the government’s hand, saying the security upgrade was “to align with all relevant laws and regulations.”
China’s market regulator separately took action against Tencent on Saturday, citing the country’s antimonopoly law. He imposed a small fine on the company, around $ 75,000, but also forced it to abandon the exclusivity agreements it had with record companies for its music business, arguing that an acquisition made it had conferred an excessive market share. Shares of Tencent Music, which trades in the United States, fell 3% on Monday and nearly 5% more on Tuesday.
A pioneer in chat apps, games and social media, Tencent’s soft-spoken founder Pony Ma has a habit of keeping the company out of the spotlight and government scrutiny.
Yet the company itself is renowned in Chinese tech circles for its aggressive competitive strategies, using its massive social media platforms first built over a decade ago to crush its budding rivals. Recently, it took stakes in a constellation of newcomers to the internet, then tied its services to them in an attempt to compete with rival e-commerce giant Alibaba. It is not clear whether the paltry fine on his musical background and the silent security shake-up are any indications that he will get away with it or that the worst is yet to come.
Alibaba shows how bad things can go. In April, Chinese authorities fined the company $ 2.8 billion for monopolistic behavior. Last year, regulators suspended the listing of Alibaba’s successful sister company, Ant Group, days before its IPO, likely slashing its market share by more than $ 100 billion.
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