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Tencent forewarns of increased regulations and restrictions in China

The company expressed intent to remain fully compliant with future regulations
Tencent forewarns of increased regulations and restrictions in China

Tencent has warned investors that increased regulatory changes from the Chinese government will impact the technology industry.

The warning was issued as the company reported an increase in second-quarter profits, contradicting concerns that the tech titan would financially suffer from recent state regulations.

Tencent president and executive director Martin Lau stated that regulations thus far have been "quite loose" with respect to the size of the industry, but that regulators are aiming to strengthen control over internet usage in China.

Tencent has implemented several restrictions in the past on how users can interact with mobile games. These include a digital lock for children that requires parental consent, limiting the time children can play their titles to one hour and recently deploying facial recognition software to greater enforce these restrictions.

Last month, state media had branded Tencent’s flagship title, Honor of Kings, a "spiritual opium", prompting the company to add new in-game restrictions, such as prohibiting under 12s from making in-app purchases in the game.

"Fully compliant”

"Regulation of the internet is a global phenomenon, it is not just in China," said Lau on a conference call.

"It is also happening in the US and Europe. China is a bit ahead in terms of the more structural regulation framework. This should be expected because (past) regulation has been quite loose over an industry like the internet, considering its size and importance."

Lau continued: "The regulators are very focused on identifying and rectifying industry failures and also establishing regulations that emphasise compliance and social responsibility, as well as improper behaviour. We should expect that in the future more regulations will be coming.

"Our attitude during this wave of regulation: we want to embrace this environment fully. And we want to establish ourselves as fully compliant. We feel that this is actually going to be good for us and for the entire industry in the long run."

Tencent recently backed the formation of Montreal-based indie studio, Raccoon Logic, created by former Typhoon Studios industry veterans.