Tencent Holdings Ltd., the Chinese tech powerhouse behind popular messaging platform and payment service WeChat and a stakeholder in Epic Games Inc., Activision Blizzard and Reddit, has landed on the Defense Department’s list of companies with ties to China’s military.
No reason was given for Tencent’s inclusion this week on the Section 1260H list, which serves as a warning to American companies and organizations about the risks of doing business with certain businesses. The list of 134 companies does not include immediate sanctions, a ban or export controls, but often leads to reputational damage — Tencent’s stock in Hong Kong plunged 7% on Tuesday, erasing billions of dollars in market value from the world’s largest video game company.
Tencent officials said the listing was “clearly a mistake” and it will appeal. Daniel Marti, head of public affairs and global policy at Tencent, told The Verge the designation “has no impact on our business” but it will “nonetheless work with the Department of Defense to address any misunderstanding,” he said.
“The U.S.’s practices violate the market competition principles and international economic and trade rules that it has always advocated, and undermine the confidence of foreign companies in investing and operating in the United States,” Liu Pengyu, a spokesperson for the Chinese embassy in Washington, said in a statement.
Being named to the Security 1260H list isn’t as dire as inclusion on the Entity list, which restricts companies like Huawei Technologies Co. from doing business with U.S. firms unless Washington, D.C., issues a license. Still, some organizations chose to stop working with companies added to the 1260H list.
The 1260H list, updated annually, is part of the federal government’s efforts to counteract what it views as China’s push to increase its military might through the use of technology from Chinese firms and universities. Tencent is based in Shenzhen, China.
The surprise, last-minute decision by the Biden administration to designate Tencent as a company with ties to the Chinese military comes amid strained relations between the world’s two biggest economies. The incoming Trump administration is threatening tariffs of up to 60% against China, escalating an existing trade war.
Some tech firms, meanwhile, are scaling back operations in China as geopolitical tensions rise.
In a letter to customers, cloud and cybersecurity company Akamai Technologies Inc. said its content delivery network (CDN) services in mainland China will cease operations next year.
“Effective June 30, 2026, all China CDN services will reach their decommission date,” the letter said. “After this date, any remaining content requests will be automatically served from neighboring countries, unless a country-specific partner solution is activated.”
