Tencent, the colossal Chinese video game company, is under scrutiny for suspected military espionage duties.
In the realm of international power dynamics, China's intertwining of research, economy, and military is a point of contention for the United States. This close integration is particularly evident in the classification of numerous East Asian companies as military enterprises, potentially impacting the gaming industry significantly.
The gaming industry is a global phenomenon, with popular titles like "League of Legends," "Fortnite," and "Call of Duty" commanding worldwide attention. Interestingly, despite their American development, these studios are either fully or partially owned by Tencent, the world's largest gaming publisher. However, Tencent's status as a Chinese gaming giant has negatively impacted them, as they've been added to a list of companies allegedly working for the Chinese military by the US Department of Defense.
This move is another chapter in the ongoing technological cold war between the two superpowers, with potential far-reaching consequences. The US Department of Defense's list is a countermeasure against China's "military-civil fusion strategy," which the US accuses of supporting modernization efforts for the Chinese military. Many military research programs are reportedly disguised as civilian facilities, according to US statements.
Tencent strongly denies the allegations of passing on data to the military, asserting they are neither a Chinese military company nor a military-civilian fusion partner for the Chinese defense industry. The company threatened legal action if the misperception was not rectified.
The rivalry between the US and China in tech and its exchange intensifies, with both countries imposing restrictions on exports. Last week, Beijing banned the export of essential minerals to the USA, while the Biden administration imposed new export controls on US-made semiconductors. Now, the video gaming industry and its developers are in the crosshairs.
The US is cognizant of the Chinese government's influence on its domestic gaming sector. Beijing has a long history of keeping a close eye on the industry. Tencent has amassed significant market power, with a market capitalization of over 410 billion euros. Restrictions for players and stricter regulations for online gaming were announced but later withdrawn.
The question arises: will the US government target Chinese influence in video games, as it has with TikTok developer Bytedance, also accused of sharing user data with the Chinese government? The "Protecting Sensitive Data of Americans from Foreign Adversaries" order focuses on social media platforms, but video games contain similar elements, such as chat functions between players.
Tencent, in the face of this designation, has the right to request a review, a process they have not yet initiated. The potential consequences for Tencent include significant reputational and operational risks, potentially affecting their business in the US market. The company is actively working to resolve the issue through negotiations and legal means.
The US Department of Defense's decision to add Tencent to a list of companies allegedly working for the Chinese military could have substantial implications for Tencent's operations in the US gaming market. This action is part of the wider technological cold war between the two superpowers, with the US raising concerns over China's "military-civil fusion strategy."
The economy, specifically the gaming industry, is now caught in the center of this geopolitical tussle, with potential consequences for globally renowned games like "League of Legends" and "Fortnite," which have Tencent as their major stakeholder.
