Is it possible that Tencent can save Snapchat? | Hacker News Reader

Is it possible that Tencent can save Snapchat?

yattell.ca

45 pointsbypasmwat64 comments

US regulators should block such a sale. No Chinese firm should be permitted to own a controlling interest in any communication system widely used in the US.

China doesn't allow US companies to do so in China, so why should Chinese companies be permitted?

> China doesn't allow US companies to do so in China, so why should Chinese companies be permitted?

China doesn't allow a lot of things, that's a pretty weak argument.

It's a fantastic argument.

If China wants 'special rules' it shall have 'special rules'.

The US can't easily go tit for tat with China because we have a much more free market system. It would be unfair to US investors if we all of a sudden started banning foreign investment.

Of course it can. It just does not want to.

Unlike China, the US needs a legal reason for this sort of decision, not just the whim of whoever is in charge. What's the legal basis for denying Snapchat to be bought by a Chinese founded firm? It's not a state owned enterprise which is the reason for most previous buyout denials.

I'm not aware of any legal basis for blocking the sale. I just don't like the idea of China, a country that runs a brutal censorship and surveillance regime, to have any control over communication or publishing tools used by the rest of us.

Even if it's only a frivolous one like SnapChat.

Classify it as a critical infrastructure. Done.

> Unlike China, the US needs a legal reason for this sort of decision, not just the whim of whoever is in charge.

Non-reciprocal trade/investment policy that disadvantages US companies, that's the legal reason right there. I understand a lot of trade policy is driven by similar kinds of things (e.g. reciprocally drop your tariffs and we'll drop ours).

Yahoo owned (before the spin off) a much larger stake in Alibaba both on a relative and an absolute basis than Tencent in Snapchat. And Alibaba is a much larger business with a dominant position.

Baidu, Alibaba and Tencent are all largely owned by foreign investors, even though they are operated by Chinese personnel.

Can you elaborate on the ownership structure of Baidu, Alibaba and Tencent?

Baidu and Alibaba are both listed in the U.S. I am not aware of Baidu but Softbank and Yahoo used to own the majority economic stake in Alibaba. Tencent is listed in Hongkong but a large stake is owned by a South African investor.

Both Baidu and Ali Baba are listed in the US in the form of depository receipts. You're not going to see any non-Chinese investor exert any meaningful influence over either of those companies as a result.

Tencent, surprisingly, is 33% owned by the South African company Naspers, as well as 7% other foreign institutional investors. Alibaba is 30% owned by the Japanese Softbank and 15% owned by a US holding company resultant of Yahoo's sale. [2] Baidu is 35%+ held by a hodgepodge of funds and holding companies. [3]

[1] http://www.4-traders.com/TENCENT-HOLDINGS-LTD-3045861/compan...

[2] http://www.4-traders.com/ALIBABA-GROUP-HOLDING-17916677/comp...

[3] http://investors.morningstar.com/ownership/shareholders-majo...

Adding up your numbers:

Tencent: 40% foreign owned Alibaba: 45% foreign owned Baidu: 35% foreign owned

None of those are majority or controlling stakes. Which is hardly the...

> Baidu, Alibaba and Tencent are all largely owned by foreign investors, even though they are operated by Chinese personnel.

...of the ancestor comment.

China has long welcomed foreign investment while simultaneously rejecting foreign control.

I wasn't aware they were mostly owned by outside investors. Even if that's true, they are participating in chinese govt mandated suppression and blocking expression. I understand thats just the way things work in China, but you can't allow people working under that basis to control important means of free expression in the US.

That is because they are traded on foreign exchanges. Though ownership doesn’t really convey much control in this sense given the voting rights public share classes (mostly to conform with Chinese laws). They are still chinese companies even if they have foreign share holders.

You sure do care about US national security a lot for having the username "Canada" :)

I think your argument makes some sense, but I don't think the world needs an escalation of isolationism. Isolationism breeds war, and it only escalates significantly when multiple nations take part.

We're using these services too, and we can say whatever we like about American politicians or policy. No problem. On WeChat we better watch what we say about the Chinese government or any of the issues it deems sensitive.

I don't like isolationism either, but in this case I believe it's justified.

Or real estate, for that matter.

How far would this extend to? For example Tencent owns League of Legends, a widely used video game in the US (or even, globally) with a communication tool?

What if WeChat just suddenly gets popular in the US? What should the US do in that situation?

WeChat is enormously popular in the US. Every Chinese person here uses it. That means a huge number of US students and employees.

I think the US should pass and aggressively enforce anti-snooping laws. No company allowed to monitor communication of customers over whatever platform that company is selling (unless the product requires it or that IS the service - some sort of Mood Analysis API or whatever). Would also conveniently take care of a key net neutrality point :)

My wife uses it also, just no one outside of the Chinese sphere of influence does. It also has no functions outside of china beyond chat, you can’t even use it to buy things at merchants who accept it (mostly spots where Chinese tourists go) unless it’s connected to a chinese bank account (so not for daily usage).

As popular as Chinese community in the US. I still don't know of anyone who doesn't speak Chinese use WeChat.

But that's still a lot of Americans, regardless of the language they speak.

yeah, part of the reason is so popular its one of the few platforms not banned in PR China because the state maintains full control over censorship...

That is a great point, a lot of communication happens over games, they do have a sort of social graph as well.

WeChat will not suddenly get popular in the US because it sucks. I'm pretty sure it wouldn't have survived in China without the firewall. But assuming it did, I think the correct response is to require it to have end to end encryption.

> WeChat will not suddenly get popular in the US because it sucks. I'm pretty sure it wouldn't have survived in China without the firewall. But assuming it did, I think the correct response is to require it to have end to end encryption.

Claims of end to end encryption are pretty worthless if you don't trust the provider and haven't audited their source code.

> What if WeChat just suddenly gets popular in the US? What should the US do in that situation?

Block it (or heavily regulate it), pending a reciprocal opening of their market.

The whole "be open, lead by example, and they'll do the same" hasn't worked with China very well.

Should we block LoL now then, or are it's communication tool(s) different for whatever reason?

> Should we block LoL now then, or are it's communication tool(s) different for whatever reason?

Blocking LoL is fine by me. China's blocked Google.

China doesn't block DotA2 (made by valve, an American company, and direct competitor to LoL), Steam, CS:GO, Android, Apple, ApplePay and ect...

They do block Google and Facebook. By censoring an entire country following that logic the internet as we know it would be a country-by-country intranet. Best case would be a game of "ACCEPT OUR SERVICES OR ELSE"

Why block an opportunity for a country to better understand our culture through the monitoring of our social media communications?

> No Chinese firm should be permitted to own a controlling interest in any communication system widely used in the US.

That can backfire very quickly, when Europe is going to say the same – no US firm should be permitted to control any system widely used in the EU.

Which would kill Google, Microsoft, and many more.

(Playing devils advocate to some degree:)

And maybe European states should. The USA and China (maybe Russia to some degree too) are the only states that have control over the main tech players whose products are used by their population. If there ever were to be a war-like scenario again with internet embargos for Europe, the internet would be a very empty space, smartphones would degrade to next to useless bricks and businesses that switched to the cloud would lose their IT backbone.

>> No Chinese firm should be permitted to own a controlling interest in any communication system widely used in the US.

> That can backfire very quickly, when Europe is going to say the same – no US firm should be permitted to control any system widely used in the EU.

China is a somewhat special case, though. It's an explicitly authoritarian oligarchy that have a proclivity for censorship and control. They should get more scrutiny from other liberal regimes than the US.

Though, if Europe wanted to disadvantage US communication products, I think they'd have a more than enough justification by citing NSA mass surveillance.

I would fully support this. And would extend it to News Corp which is Australian-owned and owns a huge chunk of our media including Fox News and the Wall Street Journal and is a much more insidious influence on our politics than Russia could hope ever hope to be.

The first amendment only applies to Americans.

Murdoch is an American.

Oh.

Murdoch "became a naturalized U.S. citizen (and as a result, gave up Australian citizenship) in 1985 to satisfy the legal requirement for U.S. television ownership"

> The first amendment only applies to Americans.

No, the first amendment (like the bill of rights generally) applies to the actions of the US government; it does not apply only when those actions effect US citizens.

I’m not sure how an app mainly used by millennials for very social purposes is going to be a security problem. Tencent acquiring it would not be a problem.

The USA is not China, it is a much more open market that has no qualms about “taking your money.” Ya, we aren’t going to sell them anything that gives them tech they don’t have already (high end fabbing or jet turbine production), but snap is much more of a business idea than a technology.

I don't think people realize that Tencent is is even bigger than Facebook.This is a big deal if they make this deal.

Most people don’t realize it because their market share is almost completely limited to one country. Also, Chinese tech companies are known for being traded at multiples greater than western ones given...investor enthusiasm.

I’m not sure what Tencent hopes to accomplish here. Western users are less interested in platforms and prefer apps.

Just like League of Legends is limited to one country /s

edit: For clarification, they own a majority share in companies like Riot Games. Their presence is emphatically not limited to one country.

Yes, Tencent has been trying to break into other markets like India with little success, and they do have Chinese overseas users. But ask a Cambodian or a Vietnamese if they use Facebook or wechat, they are 100% going to say the former and not the latter.

I think his point was that Tencent makes half of its revenue off games (which is a global business), even though people primarily associate it with WeChat (and social networking).

Keep in mind the Ministry of State Security may have asked the Organization Department to suggest Tencent do this to acquire the social graph. The fact that there is investor enthusiasm only makes it easier. This is potentially equivalent to Yuri Milner's investment actions to launder Putin's money through YCombinator and get intel along the way.

FB’s advisor on the WhatsApp acquisition was a boutique investment firm headed at the time by former CIA director George Tenet. To this day I think that Microsoft’s acquisition of Skype (which was quite expensive at the time) was also made under the same auspices, i.e. to bring an entire social network under the control of a country’s intelligence services (in this case the US services). What I’m trying to say it’s that this is a well-known game that everyone is playing.

>almost completely limited to one country.

Well, they also have South Africa...

Facebook doesn't have much revenue from games, music and videos like what Tencent did. Facebook's profile mostly rely on AD, but Tencent has much more diversity income source.

Just one person's idle speculation. It is not clear why the person has particular insight into Tencent's intentions.

Tencent owns Supercell, whose games (Clash of Clans primarily) have over 100 million daily active users worldwide.

That's just one Tencent property.

They also own a large share of Riot Games.

They own 100%.

Definitely not limited to one country - they are basically one of the largest video game companies in the world with majority holdings in Riot Games, Supercell, Epic Games and a large percentage of Activision Blizzard.

SoftBank has lots of interest in international companies also, but it still isn’t an international brand.

Since I am a Sprint Customer they are pretty big in my day to day life.

Isn’t that kind of like how Deutsch Telecom owns T-mobile, but not many really know or care? Is SoftBank trying to make itself the brand for Sprint users?

Brand and size of US capital are two different things. Yes Deutsch and SoftBank are big players in US technology.

http://www.businessinsider.com/running-list-softbank-investm...

Biggest deal is Softbank owns ARM, granted that is a UK firm but ARM really is the future especially now that Windows 10 can run on ARM. https://www.bloomberg.com/news/articles/2017-08-07/arm-bulks...

The original statement was most people don’t know Tencent is bigger than Facebook (in market cap). That’s simply because most people don’t know what Tencent is, like they don’t know SoftBank or Deutsch Telecom. They aren’t international brands.

Your worried about semantics. Tencent's corporation holdings and size doesn't isn't increased or decrease by people's knowing the name Tencent. It actually strengthens my statement that Tencent is bigger than people understand, especially here in America in knowledge of name and its corporate size.

If Tencent buys Snapchat, you can say goodbye to the "privacy" aspect of Snapchat. I think the privacy aspect is what made Snapchat the "anti-Facebook." So I wonder what will be left of Snapchat if Tencent acquires it.

maybe they just want the real estate

This is Tencent parking cash outside the purview of Chinese regulators and market exposure. All other explanations are bogus.

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