The Secret Chinese Company That Owns Everything

Tencent: The Everything App

This video discusses Tencent, a Chinese conglomerate that has created an app called WeChat which is used by almost all of China's 1.4 billion population for an average of 4 hours every day. The app combines the functionality of many popular apps and services into one platform, making it extremely convenient for users. However, there are concerns about the amount of data Tencent collects and how it is used.

Introduction

• Tencent is worth more than Facebook, Mastercard, and Samsung combined.

• Despite its value, many people outside of China are not familiar with the company or what it does.

• Tencent operates in almost every industry you can think of.

WeChat: The Everything App

• WeChat is an app created by Tencent that combines the functionality of many popular apps and services into one platform.

• It is essentially Facebook, PayPal, Whatsapp, Netflix, Google, Spotify, Uber, Yelp, Tinder, Zoom, YouTube, Deliveroo and Amazon all in one single app.

• Almost all of China's 1.4 billion population use this app for an average of 4 hours every day.

• Private messages and images sent through WeChat are scanned to see if they need to be censored by the Chinese government.

• If you say anything the Chinese government doesn't want you to say in your messages or images on WeChat then your message may not get delivered or worse case scenario you could end up in jail or disappear.

Concerns About Data Collection

• One single company having access to literally all your data - every aspect  

of your life - from your exact location to your entire bank   history to every message and call and 

search you’ve ever made - it’s a lot.

• The line between where Tencent ends and the Chinese government begins is blurry meaning that the Chinese Communist Party (CCP) has access to all that information as well, making WeChat one of the most powerful surveillance tools ever created.

• Amnesty International carried out a report on how messaging apps handle their data and concluded that Tencent was the worst offender by far, scoring 0 out of 100 for its treatment of data.

• There are concerns about transparency and what Tencent does with data, where it ends up, and not even denying that it gives the CCP a backdoor to access all encrypted messages.

Conclusion

• Tencent is unique because it has been allowed to monopolize entire industries in China and use brutal tactics to wipe out competitors without any interference from regulators.

• In exchange for that freedom, some would say as a result they’ve been turned into a weapon for the Chinese government.

Tencent: The Chinese Tech Giant Taking Over the World

In this video, we learn about Tencent, a Chinese tech giant that has expanded its reach beyond China and into many other industries. We also explore how Tencent's close ties to the Chinese government have led to controversy and concerns about censorship and privacy.

Tencent's Dominance in Gaming

• Tencent is the largest gaming company in the world with revenue significantly higher than any competitor.

• They own 100% of Riot Games, creator of League of Legends, 40% of Epic Games, creator of Fortnite, as well as stakes in Ubisoft and Activision Blizzard.

• Their gaming division alone is bigger than the entire company of Nintendo or Sony.

Tencent's Expansion Beyond Gaming

• Tencent has invested heavily in companies like Reddit, Tesla, Discord, Spotify, Snapchat and Universal Music.

• They are also huge in e-sports and have even started making Hollywood movies like Men In Black.

• Its reported WeChatPay generates over 1 billion payment transactions per day - more than Visa and Mastercard combined.

Concerns About Tencent's Ties to the Chinese Government

• Multiple governments from the US to India have called WeChat a "security threat" and others have suggested it's "a monitoring weapon in your pocket."

• There are concerns about censorship and violations of privacy and freedom of speech due to their close ties with the Chinese government.

• There are examples where China seemed to be using Tencent as a weapon to influence decisions outside of China such as when Blizzard banned a gamer who endorsed pro-democracy movement in Hong Kong.

The Two Sides of Tencent's Story

• On one hand, Tencent is one of the greatest business success stories ever and has been unfairly caught in the middle of a political storm that they didn't want any part of.

• On the other hand, Tencent is often surrounded by controversy due to their brutal monopolistic practices, blatant plagiarism, accusations of poor working conditions and close ties with the Chinese government.

• It's important to note that the Chinese government is actively hurting Tencent's business and responsible for wiping hundreds of billions off its valuation.

Introduction

The introduction provides an overview of Tencent, its influence, and the lack of public knowledge about its founder and CEO.

Tencent's Founder and CEO

• Pony Ma is the founder and CEO of Tencent.

• He is introverted and does not like being in the spotlight.

• Unlike his arch-nemesis Jack Ma, he tries to avoid controversy by not speaking out publicly.

Pony Ma's Background

• Pony Ma was a quiet kid who mostly went unnoticed throughout his school years.

• He got much attention when he hacked into his university’s computers and got a reputation as a great coder.

• For his university thesis, he created a software program that could help forecast stock price movements.

Tencent's Business Strategy

• The beginning of Tencent's future business empire did not come from some revolutionary idea that Pony himself created.

• The business was started by just ripping off someone else’s idea.

• That has remained a fundamental part of Tencent’s business strategy ever since.

Starting Out

This section covers how Tencent started out by cloning ICQ, an internet chat platform that at the time was pretty groundbreaking.

Cloning ICQ

• In 1998, Pony and his three friends from school launched their own duplicate chat service that was more catered to the Chinese market.

• They called their service OICQ which literally added the letter "O" to ICQ.

• Initially though, Tencent’s future looked bleak. They got the cheapest office they could in a chaotic neighborhood full of street vendors peddling knockoff electronics.

Tailoring OICQ for China Market

• Once Tencent had set up their internet chat service (OICQ), they did a great job of tailoring it more towards the Chinese market.

• One simple example is that because download speeds in China were so slow in the 90’s, it would take ages for people to download most chat programmes, whereas Tencent made sure their chat software had a much smaller file size so downloaded much faster.

• Unlike other chat software where you could only message people you already knew, Pony made it so that on OICQ strangers could connect if they wanted to as well, thus laying the early foundations of it becoming a social network.

Conclusion

The conclusion provides an overview of how Tencent's business strategy has remained consistent over time and how its success has been built on copying others' ideas.

Tencent's Business Strategy

• Tencent's business strategy has remained consistent over time and is based on copying others' ideas.

• This approach has allowed them to become one of the largest companies in the world.

• Despite this, Tencent tries to walk the tightrope of keeping both China and the rest of the world happy.

Tencent's Early Days

In the early days, Pony Ma worked on a software that connected pagers to the internet. However, when he saw a spike in users on their chat app OICQ, they shifted their focus to it. Despite its rapid growth, there were three major issues that caused stress for Pony and his team.

• Initially worked on connecting pagers to the internet

• Shifted focus to OICQ due to its rapid growth

• Three major issues causing stress:

• Servers in China were expensive

• OICQ wasn't making any money

• Received a lawsuit threat from AOL for violating intellectual property laws

Venture Capital Saves Tencent

With no revenue and legal issues, Pony tried to sell the company but nobody wanted to buy it. He then learned about venture capital and managed to get a meeting with China's most well-known venture capital fund called IDG Capital. Brutal honesty during the pitch convinced them to invest $2.2 million dollars for 40% of Tencent's business.

• Tried selling company but nobody wanted it

• Learned about venture capital and got a meeting with IDG Capital

• Brutal honesty during pitch convinced them to invest $2.2 million dollars for 40% of Tencent's business

The Importance of Venture Capital

If IDG Capital had not invested in Tencent at that time, they probably wouldn't exist today. The dot com bubble burst in 2000, and investment in cash-burning internet businesses all but dried up. Luckily for Tencent though, they'd got the money just in time, and so could continue operating.

• IDG Capital's investment saved Tencent from going under

• Dot com bubble burst in 2000

• Investment in cash-burning internet businesses all but dried up

Tencent's QQ: From Subscription to Virtual Items

In this section, we learn how Tencent's chat software QQ transitioned from a subscription-based model to a virtual item-based model. We also see how the introduction of avatars helped users express themselves and establish their status on the platform.

Transitioning from Subscription to Virtual Items

• Membership fee backfired horribly in China

• Discovered SayClub.com and launched own avatar feature called QQ Show

• Users could buy designer clothes, accessories, and styles for their character for a small fee

• Micro-transactions added up fast and became popular among younger users

Avatars as a Signal of Status

• Avatars became a way for users to express personality and establish status

• Many people used QQ as a dating app, making avatars even more important

• Avatar items allowed some users to establish themselves as being rich by purchasing expensive items

Microsoft Enters the Chat Market in China

In this section, we learn about Microsoft's entry into the Chinese chat market with MSN. We see how MSN quickly attracted businesses and students due to its professional appearance but struggled with decision-making due to bureaucratic corporate hierarchy.

MSN vs. Tencent's QQ

• MSN entered Chinese market as direct competitor to Tencent's QQ

• MSN was more professional and streamlined than QQ, attracting businesses and students

• Tencent had advantage over Microsoft due to faster decision-making process

• Tencent incorporated popular feature of receiving messages while offline quickly, while MSN's suggestion never went anywhere

• MSN's decision to incorporate chat into platform MSN Live confused users and added unnecessary steps

Pony Meets His Future Wife on QQ

In this section, we learn about how Pony, the founder of Tencent, met his future wife on QQ.

Meeting on QQ

• Pony met his future wife through QQ

• They chatted for three months before meeting in person

• She had no idea she was speaking to the founder of the service when they first started chatting

• Their relationship began from there and they were married six months later.

Tencent's Expansion into Internet Services

In this section, we learn about how Tencent expanded beyond being just a chat platform and became a network of integrated internet services.

QQ Dominance and Vision for Expansion

• Tencent dominated the chat market in China with over half a billion users by late 2005.

• Tencent began adding several other features into QQ to make it harder for competitors to compete with them.

• South African company Naspers invested $32 million dollars in Tencent, becoming their largest shareholder. This gave Pony the influx of cash he needed to begin the next stage of his plan.

Expansion into Gaming Market

• With the influx of cash, Tencent decided to expand into acquiring and building games of their own.

• Since many people used QQ while playing games, it was the next logical place for them to expand.

• Within just a year of integrating games into QQ, Tencent added another $50 million dollars in annual revenue.

Leveraging Chinese Market Policies

In this section, we learn about how China's policies allowed Tencent to leverage its power in negotiations and licensing deals.

Partnering with Local Companies

• China has a policy where foreign companies have to partner with local Chinese companies to sell their products or services in China.

• This meant that Tencent could team up with makers of successful games in other countries and then adapt and distribute their game to the Chinese market.

• These licensing deals allowed Tencent to make a lot of money quickly without even having to produce any games themselves.

Unfair Advantage in Negotiations

• Tencent knew they had a lot of leverage and an unfair advantage in negotiations since game makers needed a Chinese partner to bring their game to China's population.

• An anecdote from the American video game developer Zynga illustrates Tencent's power in negotiations.

Monetization through In-game Sales

In this section, we learn about how Tencent made money through in-game sales instead of upfront payments for games.

Replicating Proven Game Concepts

• Tencent replicated fairly simple games that were working well elsewhere, like QQ Speed which was heavily inspired by Mario Kart.

• Since China had a major lack of digital piracy enforcement, Tencent realized if people weren't paying for games upfront and were just sharing them for free, why not make the games free for everyone and make money through in-game sales instead?

Pushing Microtransactions

• Tencent was one of the first companies to push microtransactions so heavily.

• With monetization going so well, Tencent IPO'd on the Hong Kong stock market in 2004.

Tencent's Early Days

This section covers the early days of Tencent, including their team structure and culture decisions.

Team Structure and Culture Decisions

• A team of fifty who weren’t fully committed could reduce team morale and drag down everyone else to their level.

• Almost everyone in the business had freedom to pitch new ideas and work on new projects.

• Everyone was expected to innovate, rather than having a specific research and development division.

• The whole of Tencent’s workforce were actively monitoring the market for new apps and ideas they could incorporate into QQ.

Copycat Reputation

This section covers how Tencent became known as a "killer copycat" by copying others' ideas.

Innovation Strategy

• Tencent copied others' ideas but also had others copy them because of QQ's access to hundreds of millions of Chinese users.

• People switched to QQ’s antivirus software which was very similar anyway, giving them a huge advantage over Qihoo.

Monopolistic Practices

• Tencent informed users that Qihoo’s software was not compatible with QQ, meaning users had to choose between using Qihoo or QQ. If QQ detected Qihoo 360 safeguard on your system, QQ stopped working.

• The Chinese government showed no interest in intervening; they seemed quite happy to sit back and let Tencent grow.

Leveraging Userbase

This section covers how Tencent leveraged its userbase through its chat platform.

Expansion Strategy

• Tencent tried to compete everywhere, rather than playing to their own strengths.

• Tencent's biggest strength was in leveraging its QQ chat platform with hundreds of millions of users, to direct traffic to other places.

Copycat Reputation

• As their copycat reputation got worse, Tencent realized a new strategy might be needed.

Tencent's New Strategy

In this section, we learn about Tencent's new strategy of becoming a start-up incubator and investing in businesses to build an ecosystem.

Becoming a Start-Up Incubator

• Tencent merged their search product with the largest search engine instead of competing.

• Tencent combined with China’s second-largest online retailer, JD.com, to back one of the most prominent companies in the industry in exchange for equity.

• As a result, Tencent became a kingmaker - as support from Tencent could help ensure a company was successful.

Investing in Businesses

• Tencent's new strategy was almost to become a start-up incubator. It would invest in businesses and take some of their equity.

• They leveraged their own internet traffic, experience and capital to help the company they backed succeed.

• From Tencent’s perspective, it meant they massively reduced operational complexity as they weren’t doing literally everything themselves any more.

WeChat vs QQ

In this section, we learn about how WeChat came into existence and how it eventually surpassed QQ.

The Rise of Mobile Internet

• Mobile internet was beginning to rise in popularity very quickly; many Chinese people began using smartphones but not computers.

• Pony Ma decided that Tencent needed to create a new startup themselves because he was paranoid that with the switch to mobile happening, a new startup could displace their dominance.

The Creation of WeChat

• Pony created three separate teams to work on a new mobile messaging app, meaning they were competing against each other and also competing against Tencent’s desktop app QQ.

• Tencent began work on their mobile chat app that they wanted to essentially be a clone of Whatsapp and Kik; a free mobile chat app where people could send messages to their contacts using wifi or mobile data.

• In January 2011, they launched WeChat - although in China it has the name Weixin. Unlike QQ which had been developed for desktops, WeChat was specifically made for mobile.

The Success of WeChat

• The app was not a massive hit right away. But it did start to gain traction in China when Tencent added a feature called ‘push-to-talk’, which allowed people to easily record a voice note, and it would convert what you say into a text message.

• Companies in China would learn that an offer from Tencent was actually an offer you couldn’t refuse - you either lose your company by selling to them or lose your company by them copying and crushing you.

WeChat's Rise to Dominance in China

This section covers the rise of WeChat and how it became the dominant app in China.

Introduction to WeChat

• WeChat was launched as a mobile app that people could use anywhere.

• By 2012, WeChat had 100 million users, making it the fastest social media growth in history.

• As more people started using smartphones, WeChat surpassed QQ.

Features of WeChat

• Moments - a real-time social media feed of posts, images and articles.

• Public Accounts - a blogging service for writing articles that can be shared on Moments.

• Official Accounts - allows publishers to distribute content and businesses to distribute products and services.

• Drift Bottle - a feature within WeChat to help people find new friends or dates by sending voice or text messages in virtual bottles.

• Friends Nearby - an early version of Tinder that helped grow WeChat even faster.

Mobile Payments

• During Lunar New Year, Tencent created a red packet function within their app so people could digitally send red packets containing money to others' accounts. Over 75 million red packets were sent via WeChat during this holiday period.

• This led Tencent to realize that mobile payments were the future and create WeChat Pay, their mobile payments platform for transferring money digitally.

• WeChat's wallet feature was not just used to send payments to other people, but as a way to pay for things in shops and basically anything where money needed to be sent or paid.

Mini Programs

• In January 2017, WeChat launched Mini Programs, which allows users to access tens of thousands of other apps within WeChat's own app, completely bypassing the need for an app store.

• This helped cement WeChat as the everything app since services from other businesses were now available via Wechat as well.

WeChat: The Super App That Dominates China

In this section, the speaker talks about how WeChat has become an all-in-one app that dominates people's lives in China.

WeChat's Features

• WeChat is used to confirm plans, book taxis, play games, browse news, send locations, access restaurant menus and pay for meals.

• You can even book movie tickets through WeChat.

• Tencent has become the gatekeeper to the market for other businesses since people don't need to use the app store when WeChat has everything inside of it.

Revenue Generation

• Tencent takes a percentage of revenue generated through mini-programs on its platform.

• Unlike big tech giants in the west such as Facebook and Google, Tencent doesn't rely heavily on advertising revenue.

Why isn't WeChat Popular Outside of China?

• Estimates suggest possibly up to around 100 million people use it outside of China.

• Most users outside of China are Chinese expats living abroad or people needing to connect with others who are in China.

Tencent's Relationship with the Chinese Government

In this section, the speaker talks about how Tencent's relationship with the Chinese government affects its expansion outside of China.

Shenzhen Economic Zone

• Shenzhen was designated as the first test zone for new economic plans in 1979.

• It was where capitalist business models were allowed and began China's rapid ascent to becoming a global superpower.

Freedom for Companies

• Companies like Tencent and Alibaba capitalized on the internet and built massive user bases.

• China was happy to allow them to build such dominant companies by any means necessary, without any real regulation - as long as they were benefiting China and the CCP overall.

Expansion Outside of China

• The same reason Tencent's apps are so big in China is precisely the reason they're not so big anywhere else.

• The Chinese government's plan was essentially to give some Chinese companies a huge amount of freedom as long as they were benefiting the country overall.

Tencent and the Chinese Government

This section discusses how Tencent's partnership with the Chinese government allows for government surveillance and censorship through WeChat.

Tencent's Appeal to the Chinese Government

• Tencent's access to data was appealing to the Chinese government as it allowed them to invest in other companies both in China and abroad, giving them influence on a global scale.

• WeChat routinely blocks accounts discussing issues like the pandemic or human rights abuse issues, allowing for government censorship.

• Users who have their accounts blocked are often questioned by police, showing how closely monitored citizens are.

The Power of WeChat

• WeChat is so crucial for existence in China that users cannot give it up.

• The CCP is wary of Tencent's power and reminds them that if they stop being useful, their power can be taken away.

Compliance with Legal Requirements

• In order to comply with China's legal and regulatory requirements, Tencent can process private information without requiring user consent if requested by the Chinese government.

• The CCP reportedly has a direct line to Tencent product managers and can order deletions whenever they want.

Surveillance and Censorship

• Group admins on WeChat were made personally liable for whatever was said on group chats they run. Many simply deleted their groups as a result.

• Tencent feeds data to China’s social credit scoring system which affects what citizens can do.

• As Tencent grew larger, they had to employ hundreds or thousands of censors whose job it is to block anti-government posts.

Sacrificing Privacy for Convenience

• Over a billion people have opted to sacrifice all aspects of their privacy and free speech for convenience.

• Tencent did not set out to create a government surveillance tool, but they had no real choice but to fall in line with the CCP's demands.

Why WeChat isn't as popular outside of China

The limited international appeal of WeChat is due to surveillance and censorship, different country requirements, Tencent's focus on the Chinese market, and the historical struggle of Chinese tech companies outside of China.

Surveillance and Censorship

• Many companies in China have a special office called 'the internet security police room' where Chinese public security forces can intervene in company operations or track certain users.

• The Chinese government monitors and censors confidential information sent via Tencent's apps even from users outside of China.

• Taboo issues like mentions of Tiananmen Square or Tibet are censored on Tencent apps regardless of if you're in China or not.

Different Country Requirements

• WeChat works so well because it's perfectly tailored to China.

• Every country would need their own WeChat version with services specifically suited to their country for the app to be effective elsewhere.

Tencent's Focus on the Chinese Market

• It made more sense for Tencent to go deep into the Chinese market where they already had lots of momentum rather than diverting resources to start from scratch in other countries.

• Doubling down on China meant that Tencent didn't get the first mover advantage in other countries.

Historical Struggle of Chinese Tech Companies Outside of China

• Historically, Chinese tech companies struggle outside of China just as American companies struggle inside China.

Tencent's Battle with TikTok

TikTok, a Chinese app that has managed to go global, was the one notable exception to the rule that once your business reaches a certain size in China, you normally have to sell or partner with one of the big 3: Baidu, Alibaba or Tencent.

• The western social media giants completely dismissed the threat of TikTok until it was too late.

• American tech giants let TikTok become one of their biggest advertisers, thus letting them steal hundreds of millions of users from their platforms as TikTok ran endless ads on YouTube and Facebook.

• Tencent immediately realized TikTok's threat and assembled a large team to re-create a very similar app.

China's Tech Giants Battle for Supremacy

In this section, we learn about the anti-competitive tactics used by China's biggest companies and how TikTok's machine learning algorithm gave them an edge over Tencent.

TikTok vs. Tencent

• TikTok's machine learning algorithm accurately showed users content that would keep them on the platform longer.

• Once people were hooked on Tiktok’s algorithm, there was little incentive to switch to Tencent’s copycat version.

• Things got heated between Tencent’s founder Pony Ma and Bytedance’s founder Zhang Yiming when Zhang posted a screenshot of TikTok being the #1 most downloaded app in the world and criticized Tencent for making an almost clone version of tiktok and banning tiktok within WeChat.

Tencent's Strategy for World Domination

• Attract other businesses to launch their own mini programs via WeChat so they could leverage some of WeChat’s traffic.

• Invest money into the businesses that were doing the best since tencent had all the data of which mini programs people were using, how often, and how much money they were spending.

• After investing in certain businesses, Tencent could then artificially give more traffic to the companies it invests in thus making them even more money which they can also re-invest in even more companies.

• No other company in the world has quite the same level of data on user behavior to see what’s popular, and then significantly increase their value further by promoting them within WeChat.

Tencent's Investments

• Tencent has a significant stake in Didi, which is China’s equivalent of Uber. And through WeChat, Tencent can promote Didi more thus giving it an unfair advantage and increase the value of its investment.

• Because Didi uses WeChat pay, Tencent also takes transaction fees on every payment. It did the same thing after investing in the Chinese ecommerce company JD - once Tencent owned part of the business, they massively increased JD’s visibility within their apps to drive more sales.

Tencent: The Chinese Tech Giant

This section discusses Tencent's international portfolio and its investments in various industries outside of China. It also touches on the concerns regarding Tencent's access to data and potential influence on Western culture.

Tencent's International Portfolio

• Tencent has acquired or invested in hundreds of companies outside of China in various industries, including Tesla, Reddit, and Discord.

• Tencent mostly stays out of the way of the international companies they invest in and just takes an equity percentage without getting too involved.

• Building their brand internationally isn't a big priority for them; they're happy to quietly invest abroad.

Concerns Regarding Data Access and Influence

• Some argue that if Tencent has access to a company's data, so does the CCP, which could subtly influence decisions in these international companies and ultimately influence Western culture.

• However, Tencent hasn't yet shown any signs of influencing the companies they invest in.

Gaming Industry Investments

This section focuses on Tencent's investments in the gaming industry, which is estimated to have generated $176 billion of revenue in 2021.

Investment Strategy

• Rather than promoting their own games abroad, it made sense for Tencent to find games with potential and give them loads of money to help them grow quickly while taking a percentage of their company.

• As a result, Tencent is invested in studios that make some of the biggest global titles such as League of Legends, Fortnite, World of Warcraft , Clash of Clans, PlayerUnknown’s Battlegrounds (PUBG), and Call of Duty mobile version.

Unwanted Attention

• After Tencent acquired some popular games, there seemed to be more upgrades and unlockable content within the game that required additional payment, and some blamed this on Tencent being greedy.

• Another issue arose after acquiring Riot Games, as Tencent wanted to turn their most popular title League of Legends into a mobile game to make even more money from it. But the game developers didn't want to do this - that was never their vision of what the game should be.

Tencent: The Rise and Fall of China's Tech Giant

This video discusses the rise and fall of Tencent, one of China's biggest tech companies. It covers how Tencent became so successful, its various business ventures, and the challenges it faced from both international governments and the Chinese government.

Tencent's Success

• Used notable League of Legend players to promote their new game which caused many people to assume Riot Games were actively involved with this new game.

• Nowadays Tencent are truly great at finding ways to monetize. For example, Tencent’s video platform inserts extra ads into movies and tv series that weren’t there in the original.

• The outbreak of COVID was actually great for Tencent’s revenue; people were at home on their phones more than ever, which meant using their services and playing their games more.

International Investments

• By the end of 2017 Honor of Kings, a League of Legends inspired game was the most popular mobile game in China.

• In 2017, Tencent overtook Facebook to become the fifth-largest public company in the world.

• Their international investments were paying off massively thus extending Tencent’s influence all across the planet.

Challenges Faced by Tencent

• In 2020, suddenly Donald Trump began threatening to ban WeChat and other Chinese apps on grounds that they could be used by CCP to steal users’ private data or censor anything critical of China.

• Even now with Biden administration there are continued investigations into these Chinese apps and whether they are a national security risk that should be banned.

• In 2018, rumors of a change in government policy began to spread, and then one day Chinese regulators suddenly stopped approving all new games from being released.

Tencent's Response

• Luckily for Tencent, their strategy of taking minority stakes in international companies gave them a lot of protection.

• As long as Tencent was on good terms with the Chinese government, things should work out.

• But there is one enemy Pony Ma most certainly did not want. One enemy that could genuinely destroy them: the Chinese government.

Conclusion

• Later that year, Tencent’s profit fell for the first time in over a decade largely because it couldn’t release or monetize new games due to this new government policy.

Tencent's Fall from Grace

This section discusses how Tencent had to change the nature of some of its games to align with CCP's values. It also talks about how Jack Ma's public criticism of the Chinese government led to a crackdown on China's big tech giants, including Tencent.

Changes in Tencent Games

• Tencent had to change the nature of some of its games to ensure they aligned with CCP’s values.

• For example, PUBG was rebranded as Game for Peace and turned into a pro-government propaganda machine.

• Most people didn't like it, but they had no choice.

Jack Ma's Criticism and Crackdown on Big Tech Giants

• In October 2020, Jack Ma publicly criticized China’s traditional finance industry and its regulators.

• Shortly afterwards, The Ant Group IPO was abruptly canceled by order of the Chinese president himself.

• Jack Ma disappeared from public appearances and some questioned if he was even still alive.

• In 2021, several other large Chinese tech companies, including Tencent, received huge fines for essentially being monopolies.

• New regulations were introduced to limit the power of some of these tech companies.

• Many were surprised that Tencent was dragged into this because they were always compliant with policies and never publicly critical of the CCP.

Impact on Tencent

• The crackdown wiped off an estimated $1.5 trillion dollars off Chinese tech companies valuations due to the crackdown.

• Tencent lost over 500 billion dollars off its market cap, more than half its value, since the crackdown began.

Tencent: The Story of China's Super App

This video discusses the rise and fall of Tencent, a Chinese tech giant that created WeChat, one of the world's largest social media platforms. It covers Tencent's history, its dominance in the Chinese market, and the challenges it faced from government regulations.

Tencent's Early Days

• Tencent started as a chat software company that copied ICQ.

• They tailored their product to the Chinese market and called it QQ.

• QQ became popular in China due to its features like messaging, gaming, and virtual goods.

WeChat Takes Over

• As mobile internet grew in China, Tencent created WeChat for mobile devices.

• WeChat became an essential part of people's lives in China with features like messaging, payments, and mini-programs.

• Tencent used traffic from QQ and WeChat to diversify into other areas like gaming and video.

Challenges from Government Regulations

• Due to high rent costs, zero-covid policy, and extended lockdowns many citizens were unhappy leading to protests organized through Tecent’s apps like WeChat.

• The CCP felt big tech had grown too powerful so they needed more control over them.

• New regulations were introduced to prevent monopolies which made sense but seemed aggressive because there was almost no regulation before.

Pony Ma Disappears

• Pony Ma began showing up less at public events even missing his company's own annual party.

• Tencent's valuation continued to fall, and people began to question what was going to happen to Pony Ma and his business empire.

The Future of Tencent

• Tencent is still a dominant player in China's tech industry but faces challenges from government regulations.

• Tencent has diversified into other areas like gaming, video, and cloud computing.

• Despite the challenges, Tencent remains a major player in China's tech industry with a bright future ahead.

Tencent: The Rise and Future of China's Biggest Tech Company

This video discusses the rise of Tencent, one of the largest tech companies in China. It covers how Tencent started as a small company and grew to become a massive conglomerate with investments in gaming, social media, and other industries. The video also explores some of the controversies surrounding Tencent and its relationship with the Chinese government.

The Early Days of Tencent

• Tencent was founded in 1998 by Ma Huateng, also known as Pony Ma.

• Initially, Tencent focused on providing instant messaging services for desktop computers.

• In 2011, Tencent launched WeChat, a mobile messaging app that quickly became popular in China.

Diversification and Investment

• As WeChat grew in popularity, Tencent began investing heavily in other industries such as gaming and social media.

• By 2018, Tencent had invested in many international companies including Reddit and Discord.

• However, when China began cracking down on big tech companies to reign them in after they’d become too powerful, Tencent’s valuation began to fall.

Challenges Faced by Tencent

• There have already been layoffs over the last few years at Tencent.

• Pony recently blasted employees for being lazy and demanded more from his team.

• To stay aligned with the CCP (Chinese Communist Party), which has been cracking down on big tech companies lately, it seems clear that Tencent is trying harder than ever to stay in their good books.

Future Outlook for Tencent

• Tencent is still a very powerful company, worth hundreds of billions of dollars, with huge influence.

• Some believe the metaverse could be a big part of our future, and Tencent are arguably even better positioned than Meta for building the metaverse given their dominance in gaming and virtual worlds already.

• Whilst this video has looked at some of the controversy surrounding Tencent, they’ve also done a lot of good too and made some incredibly useful apps - so there is definitely plenty of lessons to learn here.