While Chinese internet giant Tencent is best known for its super-app WeChat, it's also a big investor in US tech companies and startups. Some of its notable and still active investments include Reddit, Snap, and Fortnite creator Epic Games.
Things could get a little awkward, though, because Tencent was there nominated A “Chinese military company” by the US Department of Defense on Monday. The list serves as a warning from the United States that companies it claims are involved in Chinese “military-civilian fusion” efforts. 2022 DoD Press Release. The listing has no legal consequences beyond barring US government contractors from doing business with Tencent through 2026. According to US law.
The notice does not say why the US believes Tencent is helping the Chinese military. Tencent is vehemently denying the listing, telling TechCrunch it's “obviously a mistake” and that “we're not a military company or supplier.” The Defense Department did not respond to requests for comment.
With an arm active in the Tencent VC world, it calls the Tencent Exploration team that it moved from Palo Alto and whose investment Others include Snap, Epic Games and insurer Oscar Health. Tencent is also a major shareholder in Reddit, although its stake recently fell below the 10% threshold. SEC filings from November 2024 show. (Reddit would not comment as of press time on exactly how much Tencent owns.)
Investing in global tech companies, particularly in sectors like health and video games, has long been a focus of Tencent. If Tencent can't get itself off the list – like smartphone maker Xiaomi did it successfully In 2021 – this could harm its investment activities in the United States, founders are wary of accepting funds from a company officially designated as linked to the Chinese military, even without public evidence.
There is also a risk that the move will lead to pressure from other parts of the US government, such as the Treasury Department, for further sanctions against Tencent. Reuters reported.
Even without further action, the list cements a long-standing trend of US-China disengagement. It was once relatively common for Chinese VCs to invest in US companies (and vice versa), but those days aren't coming back anytime soon.