U.S. Places Tencent On List Of Chinese Military Companies

Sometimes geopolitics doesn't care if all someone wants to do is play video games. Case in point: today's news that the outgoing Biden administration has placed Tencent Holdings, the owners of WeChat, on the U.S. military's list of Chinese military companies.

After a quick search, CNBC had what I thought was the best explanation of what just happened.

The National Defence Authorization Act of 2024 says that the DoD will be prohibited from procuring goods or services directly from entities on the list in June 2026, and indirectly from June 2027.

In response to the decision, Tencent said in a statement that its inclusion on the list was “clearly a mistake.”

“We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business,” the company added. CATL also called the designation “a mistake” in a response, saying it “is not engaged in any military related activities.”

Tencent has a good chance of managing to secure its exclusion from the list through U.S. courts due to the company’s business model, which primarily revolves around social networking and online gaming, said Ivan Su, senior equity analyst at Morningstar.

Perhaps not, but Tencent shares were down nearly 8% in both Hong Kong and Wall Street following the news.

So why does a blog focusing on MMORPGs care about what the outgoing U.S. administration does? Because unlike World of Warcraft and EVE Online which are published in the People's Republic of China by NetEase, our overlords in Anyang decided to partner with Tencent to publish Black Desert Online in mainland China. Back in August, I noted how swiftly Black Desert Online won approval to operate in the People's Republic once Pearl Abyss switched to Tencent as its Chinese partner: 9 days. 

Now, Pearl Abyss is in much better shape than a lot of other game companies, which are partly or wholly owned by the Chinese tech giant. Those companies include:

Riot Games: In 2011, Tencent went from being Riot's publishing partner to owner. Currently Tencent owns 100% of the League of Legends maker.

Grinding Gear Games: Back in 2018, Tencent picked up an 80% share of the maker of Path of Exile.

Epic Games: The developer of not only Fortnight but Unreal Engine became a partner of Tencent in June 2012, with the Chinese company purchasing 40% of Epic Games. Oh, and did I mention the Epic Games store?

Larian Studios: Yes, I know Baldur's Gate 3 is a single-player RPG. But with Tencent owning a 30% stake, I had to include Larian on the list.

Inclusion on the list does not impose any penalties except for not doing business with the Pentagon, but may open the door for further action if the incoming Trump administration wants to rachet up the on-going trade war between the U.S. and the People's Republic. Usually when it comes to China and video games, I watch what the Chinese bureaucracy does. Now I may have to pay closer attention to Washington D.C. as well.