Writer: Jordan Sprogis
Editor: Lillian Castro
Reviewer: Cristian Lopez
- Are other Chinese-owned companies at risk in the U.S. amid the TikTok/ByteDance ban?
- Tencent is one of the most lucrative gaming companies, powering some of the most popular video games in the world
- James Zinn from Shockbyte and Imad Qadri from BerryByte weigh in on changes that the gaming community may see if Tencent is banned
Just over a year ago, Tencent was the highest-grossing gaming company in the world. On January 7, the U.S. Department of Defense added it to a list of companies with suspected ties to the Chinese military.
Tencent denies any relation and is firm on reversing the decision. A spokesperson said it would “initiate a reconsideration process to correct this mistake.” Following the announcement, Tencent’s shares fell by 7.3% in Hong Kong.
The Department of Defense’s decision to put Tencent on the list came days after the TikTok ban almost went into effect in mid-January. (Then, President Trump extended its deadline.)
The TikTok ban is part of the greater Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACAA), which aims to “protect the national security of the United States from the threat posed by foreign adversary controlled applications.”
Now, many wonder whether the U.S. crackdown on Chinese-owned apps is just getting started.
Who Is Tencent, and Why Does It Matter?
Tencent balances a lot on its plate. The company has stakes in major gaming giants, including Riot Games (League of Legends), Epic Games (Fortnite), and Activision Blizzard (World of Warcraft and Call of Duty). Altogether, these games boast around 400 million global active monthly players.
James Zinn, Head of Partnerships of game server host Shockbyte, conveyed Tencent as a force to be reckoned with.
“While this isn’t always the case for every Tencent-backed title, their overarching global presence gives them a dominating presence in the hosting space that nearly no other host, even AWS, can compete with,” Zinn said.
It’s likely true: Tencent has a strong presence in the Asia-Pacific region, while Amazon Web Services is prominently American. It’s an epicenter where AWS doesn’t automatically have the upper hand.
What Happens If Tencent Leaves?
Imad Qadri, the CEO of game server host BerryByte, said the precedent the U.S. is creating is “deeply unsettling,” warning that policies against foreign companies could stifle innovation “as studios may hesitate to invest in or release games if their access to markets isn’t guaranteed.”
“When governments impose restrictions on games or platforms based on country of origin, it opens the door for further intervention that could fragment the global gaming ecosystem,” Qadri told us.
And for companies reliant on Tencent’s backing, finding new investors or restructuring their business models could be a major problem.
If the market loses this massive portion, competition may grow fierce, and servers could become more expensive, ultimately forcing indie teams to spend more on infrastructure instead of on the game.
This also comes at a time when there are talks of implementing up to 25% tariffs on Taiwan, the U.S.’s biggest importer of semiconductors and electronics parts.
“Tencent has such a massive wallet, they are able to be both the chicken and the egg,” Zinn said. “While many hosts are eager to support the hosting needs of developers and companies, Tencent funds new development companies of their own and owns their hosting needs before anyone else has a chance.”
Without Tencent, the gaming industry will probably face a major shift. For the sake of the fastest-growing industries in the U.S., let’s just hope it doesn’t take too much away.
