Debunking the Tencent conspiracy theory

Gaming communities have begun discussing political issues around China after the barring of top Hearthstone player Blitzchung for expressing his support for Hong Kong, which has resulted in employee walkouts at Blizzard and boycotts.

But I'm not here to talk about the Blitzchung drama itself; rather, I seek to talk about a common argument I've been reading on social media regarding the Chinese tech conglomerate Tencent Holdings Ltd. Despite what the online world thinks, I conclude that the Tencent issue is ultimately flawed, an argument that straddles paranoia and conspiracy theory; however, some of the effects attributed to Tencent might still appear to occur for unrelated reasons. Hopefully this reading should shed some background light into an increasingly important topic for anyone who plays video games, even mildly.

The internet's logic surrounding Tencent generally works as follows:

1. The Communist Party of China (CPC) has at least partial control over major Chinese companies (or at least the investment conglomerate Tencent Holdings Ltd) that they can influence the operations and resource flow of said companies.
2. Tencent invests into many major Western video game companies, giving them executive and operational control.
3. Therefore, one should not buy games from companies with Tencent investment because:
1. money spent on related games will go to the Chinese government; 
2. installing related games puts one at risk of embedded software that enables Chinese government surveillance;
3. companies that Tencent has major equity share in may engage in censorship of Chinese issues.

the first and most standout feature to note is that online communities greatly overestimate Tencent's influence over their most complained-about investments - namely, Epic Games, Riot Games, and Activision-Blizzard. Regarding Epic and ActiBlizz, Tencent is actually a minority shareholder, meaning all they have no real power over either company. This isn't just speculation; it is law (in just about everywhere) that a shareholder requires ownership of at least 50% of shares to force decisions. For all its investing, Tencent only meets the 50% rule in two major English-speaking gaming companies - Riot Games and Grinding Gear Games - which are not quite as often complained about. Even regarding Riot and GGG, these relationships are listed only as equity shareholding and are not necessarily managerial. (If this confuses you, think of it this way: Warren Buffett owns 100% of Apple share, but that doesn't quite mean he's exercising that power to decide on the features of the latest iPhone. In contrast, Elon Musk has 51% share control of SpaceX and is CEO, indicating he calls the shots.)

The next biggest reason is that the link between Tencent and the Chinese government is weaker than online communities suggest. Tencent was founded as a public company and has about as transparent of a history as one can expect from a typical corporation. The only concrete link I was able to find between Tencent and the CPC is that their CEO is a registered party member. While it is very possible Tencent may retain an underhanded friendship with the CPC, said links appear much weaker than actual companies to be afraid of: for example, Huawei has long-standing direct ties to CPC military technology, both historical and present, and even its basic equity structure is shady - a world of difference from Tencent's public, internationally-traded listings. Finally, Tencent's other subsidiaries have relatively drama-free histories, and has even had disagreements with the CPC on a few small fronts (such as censorship on their social media platforms).

This clearly puts (3a) and (3b) in the realm of general impossibility, as there is no evidence that Tencent ever had the power nor the interest in doing these things, and in fact it would harm their profit-seeking incentives. But (3c) is clearly happening as we speak. Undoubtedly, gaming companies have been censoring games for over two decades to bring them to China, and there is no doubt they will continue to do so; but one would be mistaken if they think Tencent is the main reason behind this. Rather, it is because there are over 1.3 billion mainland Chinese and gaming is a very common hobby amongst Chinese youth. It doesn't take a businessman to see the evident connection.

And even putting cold profit-seeking aside, a misconception amongst Western media is that the Chinese youth would change their opinions if they were exposed to uncensored knowledge of the CPC's history, leading them to conclude the only barrier is a legal one. The reality is that mainland Chinese youth trend towards nationalism. If you thought the recent Blitzchung actions were offensive, well, the opposite is equally offensive to the Chinese people. Given people tend not to enjoy things that are offensive to them, companies risk backlash from the general Chinese customer base in addition to the CPC's legal ramifications. From a purely utilitarian perspective, "kowtowing to China" could even be seen as positive, as game devs and other businesses stand make a larger population of people happier with their products or services.

To conclude, we have established the gaming community's imagination of Tencent as a malicious arm of the CPC has very little basis in object reality. The idea that installing Fortnite or Call of Duty onto your personal computer will somehow compromise your personal data and sell it off to the Chinese is absurd to the point of conspiracy theory* - there is no real sign that Tencent ever had the power nor the interest in doing so. However, this is hardly to say that China-related issues in gaming should be ignored. Censorship in particular has every mark of a phenomena that will continue to increase, requiring gaming companies to become ever more nimble in navigating delicate political landscapes.

*Tongue-in-cheek: If one wants an actually viable conspiracy theory, consider that these data-selling rumors might be proliferated on social media by Russian propaganda agents. (Russia is a historical foe of China after all.)