Pentagon Expands Federal Ban to Include Tencent, China’s Gaming Titan

NEWS SUMMARY

The US Department of Defense (DoD) has classified Tencent, the Chinese messaging and gaming conglomerate, as a military enterprise.

This action follows the US Department of Treasury imposing sanctions on the China-based cybersecurity firm Integrity Technology Group due to its involvement in cyber intrusion incidents targeting US critical infrastructure.

Due to this classification, Tencent is prohibited from providing technology or services to the US federal government. It joins firms like Huawei and has been added to a compilation known as “Section 1260,” alongside companies such as Contemporary Amperex Technology Company (CATL), China Overseas Shipping (COSCO), Changxin Memory Technologies, and Autel Robotics, a manufacturer of drones.

After the announcement, Tencent’s stock price in the US plummeted almost 10% on Jan. 7, amounting to billions in losses. However, unlike a sanction, this classification does not indicate that the company is unable to operate in the United States; rather, it signifies that it cannot engage in business with the federal government. A representative for the company asserted that placing Tencent on the list was “an error” and emphasized that it is neither a military entity nor a supplier to the US federal government. Furthermore, the company mentioned that, over time, its addition to the list will have “no effect” on its operations and that it intends to collaborate with the DoD to clarify the situation.