Video game publisher Tencent was one of several Chinese companies that the United States Department of Defense (DoD) claimed had links to China. On Tuesday, the Pentagon announced it had added dozens of Chinese-based firms – including Tencent, battery maker CATL, AI firm SenseTime, ChangXin Memory Technologies, Quectel Wireless, and drone maker Autel Robotics – to the list of " Chinese Military Companies" (CMC).
The DoD's list is updated annually and now includes 134 companies.
While not officially banned in the United States, the National Defense Authorization Act (NDAA) 2024 bans the DoD from working with any of the designated companies beginning in June 2026. According to a report from Nikkei Asia, the inclusion on the list is also "a blow to the reputation of affected companies and represents a stark warning to U.S. entities and firms about the risks of conducting business with them."
Tencent – A Gaming Giant
The Shenzhen-based Tencent was founded in August 2003, and it currently owns shares in more than 600 companies in the electronic entertainment sector. It fully controls Riot Games, maker of League of Legends, and Grinding Gear Games, creator of Path of Exile; while it has partial ownership of Epic Games and Ubisoft.
Tencent's Hong Kong-traded shares fell 7.3% on Tuesday following the DoD's announcement.
"As the company is neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base, it believes that its inclusion in the CMC List is a mistake," Tencent said in an announcement to the Hong Kong Stock Exchange, per CBS News.
Tech Firms Links to Beijing
It isn't uncommon for any and all Chinese firms to end up on such blacklists, in no small part due to Beijing's military-civil fusion (MCF), which encourages private firms to partner with the People's Liberation Army (PLA). The goal is to achieve a world-class military by 2049 or earlier.
As the Foundation for Defense of Democracies explained, "This law and associated regulations require Chinese private firms to permit Beijing direct access to their data and mandates their cooperation in protecting Chinese national security interests. This process ensures that the PLA and other elements of China's security and intelligence services can dramatically expand the scope of their reliance on China's civilian economy to bolster their strength and challenge the United States more effectively."
This is why a video game publisher, one that has ties to international studios is suddenly on the DoD's CMC list.
"The core concern with companies like Tencent is that it can conduct surveillance and intelligence opens by gathering large amounts of data on large amounts of players," Dr. Matthew Schmidt, professor of national security and political science at the University of New Haven, told The National Interest.
"It's a game of probabilities. 99% of players are uninteresting targets, but in a population of many millions you'll find some good fish to hook," Schmidt said.
Game Chat Monitored
Video games that are hosted online can record vast quantities of data – including messages between players. That may not seem significant, but Schmidt explained the problem is far deeper than meets the eye.
"They can monitor personal messages between players, use that data to analyze political views and establish any relationships those players may have to classified information or to people with classified information, and create target lists for espionage," Schmidt continued.
The game publisher even has the ability o track movements as people log on to play the game or send messages from different destinations.
"These are the kinds of things that would allow the Chinese military's intelligence branch to gather the back-end information that supports targeting people they exploit based on the information gathered from chats and what that info gives them about other platforms and movement patterns to build the social network diagrams that help Chinese agencies focus on the most likely people they could exploit for access to information," Schmidt continued. "It's the same thing the U.S. does in reverse."
Many companies gather this kind of information and could do this kind of analysis if they wanted. The DoD is especially concerned when it involves China due to MCF.
"Remember the axiom of the Internet Age: if you don't know what the product is they're selling, you're the product. That is, the data you generate when you use Facebook or X/Twitter is where the value is because it allows companies that do sell things to target you," Schmidt told The National Interest. "It's the same science; it's just that one organization targets you for espionage, the other for marketing. The end goal is different, but the process is basically the same."
Gaming Could be a Voter Issue
Even today, video gamers are dismissed as teenage boys in their bedrooms or basements—but it is a multi-billion dollar global industry. The question will be how to balance the economic interests in supporting the digital economy with political interests and not anger millions of constituents by obstructing the digital services they want, and the legitimate security concerns of the government.
"To the generations now of voting age, gaming isn't a fringe issue, it's becoming a core political concern," suggested Schmidt.
Just as we have seen with TikTok, many Americans are less concerned with security and more focused on being able to use the app they've come to love. Gamers could be even more passionate if they were to lose access to League of Legends or the next big hit that Tencent brings to market.
"We haven't figured out the balance yet, and I'd suspect the elder statesmen in power now won't be the last word. My kids fight for more screen time and the ability to play games I ban, every day," Schmidt added. "Someday they'll be power and, as they remind me, they'll let their kids play whatever they want."
Author Experience and Expertise: Peter Suciu
Peter Suciu is a Michigan-based writer. He has contributed to more than four dozen magazines, newspapers, and websites with over 3,200 published pieces over a twenty-year career in journalism. He regularly writes about military hardware, firearms history, cybersecurity, politics, and international affairs. Peter is also a Contributing Writer for Forbes and Clearance Jobs. You can follow him on Twitter: @PeterSuciu. You can email the author: Editor@nationalinterest.org.
Image: Wikimedia Commons.
