By Sagar V. Mankar 
Chinese technology giant Tencent has been added to the US Department of Defense’s list of “Chinese military companies.”
While this designation doesn’t impose direct sanctions or bans, it creates new challenges for Tencent’s operations in the United States. The company, known for owning Riot Games (creator of League of Legends) and holding significant investments in Epic Games, Larian Studios, Ubisoft, and FromSoftware, now faces potential business complications in the American market.
Background on the Designation
The designation stems from a 2020 executive order issued by then-President Donald Trump, which restricts US companies from investing in entities considered to have ties to the Chinese military.
The list, updated annually under the William M. (Mac) Thornberry National Defense Authorization Act of 2021, now includes 134 entities, with Tencent and CATL among the latest additions.
Tencent’s Response and Market Reaction
Tencent has strongly contested the designation. “We are not a military company or supplier,” stated Danny Marti, Tencent’s spokesperson, in comments to The Verge. The company maintains that while the listing doesn’t directly impact its business operations, they will work with the Department of Defense to address what they view as a misunderstanding.
The immediate market response has been notable, with Tencent’s stock value declining significantly. However, it’s worth noting that the company’s gaming subsidiaries, including TiMi Studio Group and LightSpeed Studios, were not specifically named in the designation.
Historical Context and Similar Cases
This isn’t the first time a major Chinese company has faced such challenges. DJI, the world’s largest drone manufacturer, was added to the list in 2022 and has since reported significant business disruptions.
However, there is precedent for removal from the list. Chinese smartphone maker Xiaomi successfully contested its designation and was removed just months after being added in 2021. This suggests that Tencent’s status could potentially change through the available reconsideration process.
Source: CNBC