Do not panic — this is not Tencent’s first tie-up with a state-owned agency • TechCrunch

Information on Tencent and China Unicom is inflicting a stir in China’s tech trade on Wednesday afternoon. The gaming and social networking behemoth and the state-owned provider have obtained regulatory approval to arrange a three way partnership, in line with a authorities announcement.

Following the transaction, Tencent and China Unicom will respectively personal 42% and 47% of the agency.

The event has led to considerations over even higher authorities affect on China’s Massive Tech. Some netizens go so far as speculating Tencent will ultimately be de-privatized. This response is anticipated given China has been tightening its grip on the web trade over the previous three years. Tencent’s gaming enterprise, as an example, took a giant hit when Beijing halted the issuance of latest gaming permits.

However a more in-depth take a look at the discover suggests this new “combined possession” entity appears to have a restricted affect on Tencent’s present enterprise. The entity, in line with a submitting in September, will focus on two areas: content material supply community and edge computing. CDN refers to a geographically distributed community of servers that work collectively to hurry up content material distribution for customers, whereas edge computing means processing information on the periphery reasonably than the middle of a community.

Tencent’s cloud computing arm appears most pertinent to the brand new JV. The enterprise-facing section has gained new significance as a income driver since China’s regulatory clampdown despatched chills throughout the patron web sector. And it’s certainly within the space of net infrastructure the place Tencent’s involvement within the public sector has been probably the most energetic.

Tencent Cloud has a web page devoted to showcasing the kind of public companies it empowers. From on-line authorities companies to group facilities with self-serve kiosks, one can discover options provided by Tencent — and actually, Alibaba, Baidu, and different tech giants we properly. Beijing has been working to digitize the federal government equipment for years, and what higher answer suppliers are there than its personal tech darlings?

Tencent has been boasting the position of WeChat as a digital infrastructure for presidency companies as early as 2019:

The WeChat proprietor isn’t any stranger to combined possession both. In 2017, China Unicom was looking for to boost $11.7 billion from a dozen traders — together with Tencent and Alibaba — as a part of Beijing’s push to revitalize state-owned enterprises with non-public capital, a construction dubbed ‘combined possession.’

Working with a state-owned entity doesn’t naturally suggest a higher presence of the seen hand at Tencent. The aim of an SOE is to earn income for the federal government, too. However undeniably, China’s non-public tech sector has been below rising stress to align its curiosity with that of the state by a sequence of regulatory overhauls, usually at the price of their profitability. Ant Group has gone by a deep restructuring to play extra like a conventional monetary establishment. Tencent has ramped up safety for minors and put extra effort into instructional video games.