Most of you at one point or another have likely heard of Tencent, the parent company of Riot Games, and a stake holder in companies like Epic Games and From Software. As of today though, the company is in a huge amount of trouble in the US due to alleged ties with the Chinese military. Incidentally, this is also coming off the back of the TikTok ban that is supposed to occur in the US later this month.

What exactly does this mean for US citizens who use services and play games owned by Tencent? We're not quite sure yet. Tencent has stakes in several-hundred companies, so we're doubtful that it'll somehow become illegal to use services owned or staked by them, but it's by no means unlikely that some of these services will be threatened to end up like TikTok.

Quote From The New York Times

The Pentagon on Monday labeled Tencent, the Chinese social media and gaming giant, as a Chinese military business operating in the United States, the latest action in an escalating series of retaliatory moves between the world’s two superpowers.

Tencent’s shares in the United States plunged by nearly 10 percent after the decision by the Defense Department, which also targeted Chinese battery, drone and shipping companies.

The Defense Department updates annually a list of what it designates as “Chinese military companies,” entities it has identified as having both military and commercial technology. There are now 134 companies on the list, which was posted to the Federal Register. It also added Contemporary Amperex Technology Company, known as CATL, as well as China Overseas Shipping, known as COSCO; the chipmaker Changxin Memory Technologies; and the drone maker Autel Robotics. China Overseas Shipping is China’s largest shipping line and one of the biggest in the world.

Putting Tencent on the list was “clearly a mistake,” a spokeswoman for the company said in an emailed statement. “We are not a military company or supplier.”

Tencent also said that the listing would have “no impact on our business,” and that it would “work with the Department of Defense to address any misunderstanding.”

The designation is a warning to businesses in the United States that working with companies on the list could get them barred from future Pentagon contracts.

To be added to the list, a company must have some business operations within the United States. For example, CATL is licensing its battery technology to the American carmaker Ford Motor, which is building a $3.5 billion electric vehicle factory in Michigan.

A spokesman for CATL said the company had “never engaged in any military-related business or activities,” adding that the designation “does not restrict CATL from conducting business with entities other than the Department of Defense and is expected to have no substantially adverse impact on our business.” CATL planned to dispute being added to the blacklist and said it could consider legal action.

Other companies added to the list did not immediately respond to requests for comment.

As tensions between the United States and China have escalated in recent years, pressure has been growing from lawmakers to find ways to thwart China’s advances technologically and militarily.

In 2021, the Chinese consumer electronics company Xiaomi successfully sued the Pentagon to be removed from the blacklist after arguing in federal court that it had no ties to the Chinese military.

More recently, the countries have engaged in an escalating economic tit-for-tat. It began during the first term of President-elect Donald J. Trump, after he took aim at China with tariffs and restrictions on trade. At that time, Beijing took mostly symbolic and measured responses in retaliation.

Since then, the Biden administration has expanded its restrictions on Chinese companies and imposed bans on dual-use products, recently targeting 140 Chinese companies. On Thursday, the administration said it was considering a new rule that could restrict or ban Chinese drones in the United States.

Beijing has adopted an increasingly aggressive stance as it prepares for a second presidential term with Mr. Trump, an outspoken critic of China and its economic might.

Chinese regulators have announced an investigation into the American computer chip company Nvidia, banned the export of rare minerals to the United States and taken more targeted swipes at individual companies to expose their supply chain vulnerabilities.

Janet L. Yellen, the Treasury secretary, and her Chinese counterpart, He Lifeng, held a virtual meeting on Monday, their latest in a series intended to promote discussions between the countries’ economic policymakers. According to a readout from the Treasury Department, both sides aired concerns over rising economic tensions. Ms. Yellen warned that Chinese polices that affect American companies and workers would continue to have a harmful impact on the United States-China relationship, according to the readout.

Mr. He raised concerns about Washington’s economic and trade restrictions on China, Chinese state media reported.

What do think will come of this Tencent blacklist, and what are your thoughts on it? Let us know in the comments below.