How Tencent Overcame Tech Leaks to Benefit China’s Censorship

In the year In mid-2018, a team of engineers at Tencent, one of China’s largest technology companies, began crunching data to predict which Communist Party officials would make it to the Politburo Standing Committee.

While companies such as Microsoft and Google routinely open up their data to political commentators and the public for similar purposes, doing so in China is highly sensitive, and the party was outraged when it found out. Tencent has been ordered to stop releasing new apps and updates, and founder Pony Ma has largely disappeared from public view for nearly a year.

“Tencent’s experiments in data modeling and surveillance struck a nerve in the Party’s top leadership, because they highlighted the power Tencent wielded,” Lulu Chen wrote. Empire of Influence: The Story of Tencent and China’s Tech Ambitiona new book about Mr. Ma and Tencent.

Ms. Chen, Bloomberg’s longtime technology reporter, described how the Politburo incident was a rare misstep for the company, which has become the most influential tech company in China thanks to the popular messaging and social media app WeChat.

He did so while maintaining close ties to the Communist Party because the app allowed the government to censor and monitor its subjects on a level not previously possible.

Often referred to as a “super-app”, WeChat includes a myriad of services beyond its basic messaging functionality. It can be used to book taxis, order food in restaurants, pay bills, apply for loans and, from 2020, display colored QR codes that record an individual’s Covid status.

“WeChat is all-encompassing, covering all aspects of life in China,” Ms. Chen told The Globe and Mail. “It really benefits the government and allows them to track people in a way that they wouldn’t be able to do without an app that’s ingrained in people’s lives.”

A tech campaign that has wiped billions of dollars from some of China’s biggest companies and sent Alibaba founder Jack Ma into the political wilderness, but Tencent has weathered the storm better than its rivals.

That’s because both the government values ​​WeChat in particular, Ms. Chen noted, and because Mr. Ma has a low profile compared to many of his competitors.

Communist Party control is nothing new in China – the Financial Times reported this week that HSBC recently opened a party committee for its China investment arm. But Ms. Chen described Tencent in her book as a company unusually close to the government, albeit nominally private.

When WeChat emerged on the scene in the early 2010s, it was seen by many viewers as a potential threat to censors, group chats making previously public conversations private. The authorities are said to be paying attention to sensitive conversations on WeChat, or sharing content on Weibo or other social media platforms, or not being able to reach a wider audience.

But as the app grew in popularity, the government began to pay attention. Before long, people were being accused of things they said in group chats, or of communicating things privately to a friend.

As WeChat becomes more enmeshed in people’s lives, the government suddenly has the level of discretion it once craved, and as many become wary of censorship and surveillance, they find they can’t live without the app.

One of the reasons the Great Firewall—China’s vast censorship and surveillance apparatus—has been so effective is that Beijing has privatized much of the work involved in building and managing it.

Companies like Tencent are given broad guidelines about the type of content they must police, which often means they side with big censors for fear of retribution. They have built mechanisms to ensure that the strong security bureaucracy may never come.

“Private companies are always more innovative because they practice more capitalistic models and deploy their capital more efficiently,” Ms Chen said.

The censors have benefited from consolidation in the technology sector, she said, thanks to the acquisition of Tencent and many other competitors. Instead of playing whack-a-mole with 10,000 small companies, you have these few giant companies and it makes it easier for the government to issue guidelines.

Ms Chen said the ongoing tech eclipse “has slowed the startup landscape of platform companies in China in particular, so it could further strengthen Tencent’s dominance”. “Tencent was confused about what the next WeChat would be, what would come and what wouldn’t match them, and now they may have a longer time on it because of this slowdown.”

This move is certainly not all good news for Tencent, especially for its least affected app – WeChat – which also earns the least amount of money. New restrictions on games in China have wiped out one of Tencent’s biggest sectors, forcing it to look for overseas markets, and Beijing has boosted its investment arm as it continues to scrutinize acquisitions.

But in an industry where some companies face billions of dollars in fines, owning an app vital to the Communist Party’s survival could prove the most important investment of all.

James Griffiths is an Asia correspondent for the Globe and Mail based in Hong Kong. He is an author. The Great Firewall of China: How to Build and Control an Internet Option.