CHINESE GOVERNMENT WANTS MORE
China Wants in on Tech Boom
The Chinese government is pushing some of its biggest tech companies – including Tencent, Weibo and a unit of Alibaba – to offer the state a stake in them and a direct role in corporate decisions. Wary of the increasing power of private businesses, internet regulators have discussed taking 1% stakes with social-media powers Tencent Holdings Ltd. and Weibo Corp. and with Yonku Turdou, a YouTube-like video platform owned by e-commerce titan Alibaba Group Holding Ltd., according to people close to the companies.
The government already regulates internet and media companies, but the reach of these companies is rapidly expanding. Some influence millions of users through mobile phones. Tencent shares have appreciated 85% in U.S. trading just this year, and the stock’s market value exceeds $427 billion. Alibaba stock is up 110% year to date and has a market value of more than $467 billion. That makes them bigger than some of the biggest state-owned enterprises in China, including China Construction Bank and China Mobile. Weibo shares are up more than 145% this year, but it is much smaller with a market cap of $21.7 billion.
The new steps come as pressure on China’s tech companies is rising. Regulators last month fined social-media platforms owned by Tencent, Weibo, and Baidu for hosting pornography, fake news, and other banned content. After the Communist Party Newspaper People’s Daily attacked Tencent’s top game, “Honor of Kings,” for being too addictive for younger Chinese, the company’s share price fell 4% in one day, wiping $14 billion off its market value.
An initial rollout of what the government calls “special management shares” started with two internet media startups. Regulators and the People’s Daily website are taking less than 2% in mobile news platform Yidian Zixun and Beijing Tiexue Tech Co., operator of a patriotic news site. In exchange, the investors get to appoint a government official to the companies’ boards and have a say over their operations, people familiar with the deals said
Keep those stops tight
Todd “Bubba” Horwitz
IN ASSOCIATION WITH