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Tencent suspends signups to WeChat, citing 'security upgrade' and need to comply with Chinese laws
Promises everything will be back to normal sometime in early August
Chinese web giant Tencent has suspended new signups to its WeChat messaging service.
A notification posted yesterday to the WeChat account on Sina Weibo, China's Twitter analogue, said the reason for the suspension is a security upgrade.
The upgrade is expected to conclude in "early August". Tencent hasn't defined a range of dates that fits within that phrase, leaving open the possibility that the suspension could last a week or more.
Nor does the notification specify the laws that make the suspension necessary.
The suspension has been interpreted as signalling Beijing's regulatory blowtorch, which has recently focussed on Chinese tech orgs that list and/or store data offshore, has been aimed at Tencent. The company copped a little heat last weekend when a modest fine was imposed over its music service doing exclusive distribution deals with record companies, and was also prevented from merging two of its gaming businesses.
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WeChat is utterly ubiquitous in China, having overtaken SMS to become the default for text messaging in a way that makes Facebook's WhatsApp look on with envy. Tencent has used the platform's billion-plus user base to expand into payment systems, e-commerce, and many more services.
Internet platform businesses inherently share common characteristics with society
Beijing has recently concluded that while it likes the way its web giants grease the wheels of the economy, they can't be allowed to become de facto drivers of economic policy. Increasingly explicit regulations have therefore reined them in. The web giants have complied with those regulations and, in documents like Alibaba chair Daniel Zhang's 2021 Letter to Shareholders, published yesterday, accepted the regulatory changes as necessary.
"Internet platform businesses inherently share common characteristics with society," Zhang wrote. "We need to give more thought towards the positive value being created for society; addressing challenges related to essential technology; supporting the development of rural revitalization; becoming more environmentally friendly and sustainable."
"We want to be a responsible corporate citizen and a good company in substance."
That kind of talk goes down very well in China, but less so with global investors who see that China's web giants are being restricted from the kind of untrammelled growth that was hoped to deliver capital growth and/or fat dividends.
Tencent shares dipped almost nine per cent on news of the WeChat signup suspension. ®