Don’t panic — this isn’t Tencent’s first tie-up with a state-owned firm • TechCrunch


News on Tencent and China Unicom caused a stir in China’s tech industry on Wednesday afternoon. The gaming and social networking giant and the state-owned carrier have received regulatory approval to create a joint venture, according to a government Advertising.

After the deal, Tencent and China Unicom will respectively own 42% and 47% of the company.

The development has led to concerns about the government’s greater influence over large Chinese tech companies. Some netizens go so far as to speculate that Tencent will eventually be de-privatised. This reaction is to be expected as China has been tightening its grip on the internet industry for the past three years. Tencent’s gaming business, for example, took a big hit When Beijing stopped issuing new gambling permits.

But a closer look at the notice indicates that this new “mixed ownership” entity appears to have limited impact on Tencent’s existing business. Entity by deposit In September, it will center around two areas: Content Delivery Network and Edge Computing. CDN refers to a network of geographically distributed servers that work together to speed up the distribution of content to users, while edge computing means processing data at the edges rather than the center of the network.

Tencent’s cloud computing arm appears to be more relevant to the new project. The enterprise-facing sector has gained new importance as a revenue driver since a regulatory crackdown in China sent chills in the consumer internet sector. It is already in the field of web infrastructure where Tencent’s involvement in the public sector has been the most active.

Tencent Cloud owns a file page Dedicated to showcasing the kind of public services it enables. From online government services to community centers with self-service kiosks, one can find solutions provided by Tencent – and in fact, Alibaba, Baidu, and other tech giants we’re pretty good at. Beijing has been digitizing government agencies for years, and what better solution providers are technology darlings?

Tencent is proud of WeChat’s role as a digital infrastructure for government services since 2019:

WeChat owner is no stranger to mixed ownership. In 2017, China Unicom was striving for Raised $11.7 billion from dozens of investors – including Tencent and Alibaba – as part of Beijing’s drive to revitalize state-owned companies with private capital, a structure dubbed “mixed ownership”.

Of course, working with a state-owned entity does not mean a greater presence of Tencent’s visible hand. The objective of the state-owned company is to make profit for the government as well. But undeniably, China’s private tech sector has come under increasing pressure to align its interest with those of the state through a series of regulatory reforms, often at the expense of its profitability. The ant group has passed deep restructuring To play like a traditional financial institution. Tencent has Intensive protection for minors And put more effort into educational games.

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