Chinese technology giant Tencent has bought a 5 percent stake in Melbourne-based Afterpay, meanwhile, as it expands into the United States it must contend with a push to ban Beijing-backed software from being used by U.S. officials.
The announcement came on May 1 with Tencent Holdings paying around $300 million (US$192.8 million) for its stake in Afterpay.
In a statement, Afterpay co-founders Anthony Eisen and Nick Molnar said they were privileged to have Tencent become a substantial shareholder in the business and were hoping to learn from one of the “worlds most successful digital platform businesses.”
Tencents Stake in Afterpay
Afterpay is a digital payment service that has gained popularity with millennials and Generation Z consumers.
It allows customers to buy something now and pay it off later in fortnightly installments. Afterpay does not conduct a credit check on customers making it less stringent than credit cards.
According to an Oct. 2019 press release, Afterpay conducts “millions” of purchases each month and they work with over 30,000 businesses locally. It is also expanding into the UK and U.S.
Tencents Chief Strategy Officer James Mitchell said that outside of China they were keen to invest in pioneering financial technology companies and Afterpay aligned “well with consumer trends developing globally.”
Last year, Tencent bought a stake in online forum Reddit for $232.5 million (US$150 million). Commenting on the move, James Gorrie, author of “The China Crisis,” believed Tencent was establishing another channel for the Chinese communist regime to spread its influence.
“But just as compelling about Reddits new owners is Tencents—and the CCPs—access to the personal information of millions of Americans and other Westerners,” he said.
Tencent is an active investor globally with over 456 companies in its portfolio.
US Bill Against Chinese Espionage
In the United States, republican senators Ted Cruz (R-Texas) and Josh Hawley (R-Mo.) announced on April 30 they would be introducing a bill aimed at banning federal employees from using tech platforms influenced by the Chinese Communist Party.
It would require an annual list of technology companies to be compiled and submitted to Congress. The companies would be those believed to be “subject to influence or control” by the Chinese regime.
The Countering Chinese Attempts at Snooping Act of 2020 would ban officials from conducting business “over any social media, computer or smartphone application, or telecommunications technology, produced, operated, or hosted.”
The bill identified five Chinese tech companies including Tencent, Huawei, ZTE, Alibaba, and Baidu.
The bill recognises that these companies will assist the CCP if called upon and engage in espionage to gain “insight into the profiles, activity, or location of foreign users” via their products.
In 2017, the Chinese regime introduced the national intelligence law that mandated that private companies in China must “support, assist and cooperate with the state intelligence work.” The implied power allows authorities to access data from China-based companies.
Senator Cruz said, “Companies like Tencent and Huawei are espionage operations for the Chinese Communist Party, masquerading as telecom companies for the 21st century.”
Senator Hawley called Tencent “a glorified surveillance arm of the Chinese Communist Party.”
When questioned about security concerns, Afterpay co-founder Anthony Eisen told The Sydney Morning Herald on May 3 that they were not concerned with security risks and were excited about the collaboration.
“Theres no board representation. Its purely a financial investment,” said Eisen.
What is Tencent Holdings?
Tencent is a Shenzhen-based conglomerate with a broad range of interests including video gaming, entertainment, and start-up investments. It is best known for its communication platforms WeChat and QQ.
WeChat is a messaging app which currently has 1.1 billion monthly users worldwide, it is one of the largest messaging apps in the world after Facebook and WhatsApp.
Its largest following is in China, where competitorsRead More – Source