Tencent Faces U.S. Blacklist Over Allegations of Supporting Chinese Military Efforts

On Monday (1/6/25), a report was released revealing that the U.S. Department of Defense has placed gaming behemoth Tencent on its roster of companies supposedly supporting the Chinese military. Joining Tencent on the list are Chinese firms CATL, ChangXin Memory Technologies, Quectel Wireless, and drone manufacturer Autel Robotics.

Previously, last year, Chinese firms DJI and Hesai Technologies were both included on the same roster. While they continue to be featured, both companies initiated legal action against the Pentagon concerning the U.S. Defense Department’s classification.

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According to Nikkei Asia, “Though the designation doesn’t impose immediate restrictions, it can severely damage the reputations of the implicated firms and serves as a significant caution to U.S. organizations and corporations regarding the hazards associated with transacting with them.”

Both Tencent and CATL refute claims made by the U.S. Department of Defense report

Tencent is recognized as one of the most prominent entities in the gaming sector. It possesses stakes in over 600 companies, including some of the leading video game publishers. Epic Games, Larian Studios, FromSoftware, and Ubisoft are merely a few of the companies partially owned by the Chinese conglomerate. Other game developers, such as the makers of League of Legends, Riot Games, and the creators behind Path of Exile, Grinding Gear Games, are fully owned by Tencent.

This is not the first occasion the U.S. government has targeted Tencent. Before departing office in 2020, former president Donald Trump enacted an executive order prohibiting U.S. companies from investing in organizations linked to the Chinese military. This mandate also led to the prohibition of all transactions involving Tencent’s WeChat application.

As stated by a Tencent representative to The Verge, “We are neither a military organization nor a supplier.” Following the announcement from the U.S. Department of Defense, Tencent’s market share in the U.S. decreased by 8%, now at 9.8%. While this designation may not impede the sale of Tencent-owned games in the U.S., it might influence the manner in which its companies engage with U.S. customers. Riot Games and Grinding Gear Games, the developers behind League of Legends and Path of Exile, respectively, utilize a free-to-play economic model for their titles. Given the 2020 executive order prohibiting WeChat transactions, there arises a possibility that similar limitations could apply to microtransactions that contribute to the funding of these games.