Pentagon Adds Chinese Gaming Giant Tencent to Federal Ban

Chinese messaging and gaming giant Tencent has been labeled a Chinese military business by the US Department of Defense (DoD).

The move comes on the heels of the US Department of Treasury sanctioning China-based cybersecurity company Integrity Technology Group for its role in computer-intrusion incidents against US critical infrastructure.

With the designation, Tencent cannot supply the US federal government with technology or services. It joins others like Huawei, and was added to the list known as "Section 1260" as part of a group that includes Contemporary Amperex Technology Company (CATL), China Overseas Shipping (COSCO), Changxin Memory Technologies, and Autel Robotics, a drone manufacturer.

The price of Tencent's shares in the US dropped nearly 10% on Jan. 7 after the announcement, accounting for billions in losses, but unlike a sanctioning, the designation does not mean that the firm can't still operate stateside, only that it can't do business with the federal government. A spokesperson for the company said that putting Tencent on the list was "a mistake" and that it is not a military company or supplier to the US federal government. The company also said that, in the long run, being added to the list will have "no impact" on the business and that it will work with the DoD to address the misunderstanding.