US adds Tencent to its Chinese Military entity list, but what does that mean?

The United States has added technology giant China-based Tencent to a list of companies designated as partners with the Chinese military, according to Bloomberg.

Tencent is one of the ten biggest companies in the world, with ownership or investment in multiple game developers and publishers, and is the developer of WeChat, one of the world's largest social media and messaging platforms.

Previously, WeChat was specifically named to be banned along with TikTok by the first Trump administration, but this was halted by a federal judge and officially undone by the Biden administration.

Now, it appears the whole mess is happening again, albeit for a different reason this time.

In the past, concerns over WeChat centered around data collection and retention by China. This time, Tencent — WeChat's parent company — is under scrutiny because the U.S. thinks it has ties to the Chinese military. In statements to The Verge and Bloomberg, Tencent has denied these allegations and says it will work with the Department of Defense to be removed from this list.

In the meantime, being on the list doesn't block anyone from using Tencent's services or gaming titles. You can still play Valorant or League of Legends, and WeChat use in the States won't be interrupted in any way. It does, however, deal quite a blow to a company's reputation in the West, and Tencent's stock prices fell over seven percentage points with the news.

So what does this mean? WeChat is the brand most affected by anything that happens with Tencent because it is the company's biggest platform by far. With approximately 1 billion users in China alone, the platform dwarfs most other services of its type. It's worth noting that there are also over 4 million WeChat users in the U.S. who would be affected by any governmental action against Tencent.

Which could be coming. The Trump 2.0 administration will be as unpredictable as it was the first time whenever it comes to dealings with China. We could see this develop into a fill-on Huawei-style banning should the president decide to do it. We could also see it just go away if it's shown that Tencent really doesn't belong on this list. That is exactly what happened with Xiaomi when it was found to have been added in error in 2021.

Tencent was also in hot water with the Department of Justice, which claims there are antitrust violations with the way Tencent and Epic Games (Tencent owns 35% of Epic) were running their Board of Directors. This has no direct relationship with the addition to any DoD lists but is ammunition should further action be considered.

In short, if you use WeChat on your phone you don't have anything to worry about yet. Tomorrow, however, is another day.