Is Sony The Next TikTok?
There was a time when Sony was America’s go-to electronics company. Its stereos, TVs, car stereos, and tape decks were state of the art. Its name was emblazoned on the scoreboard at Dodger Stadium, a cathedral of America’s pastime — the story went that Sony bought the scoreboard for the Dodgers and charged them just $1 for the privilege of putting its name on the bottom.
But in recent years, seemingly lured by a Chinese market with triple the population and dramatically increased buying power, Sony has fallen in with the wrong crowd.
Today, the partner Sony seems to seek to impress most is not the Dodgers or American baseball fans but Tencent, a Chinese corporation controlled by the Chinese Communist Party.
While China doesn’t own Tencent outright, it holds what are known as “golden shares” in the company, which gives it enhanced rights to dictate its management initiatives, a sine qua non of Chinese deals in recent years. So, it should come as no surprise that the CCP reportedly holds events at Tencent’s headquarters and that nearly 25% of Tencent’s employees are CCP members.
That’s why it’s so concerning that the company, which started with seed money from a known CCP-controlled entity, has partnered with Sony to invest in FromSoftware, maker of the popular video game Elden Ring, and Quantic Dream, a French software developer, among
Sony may have aligned with the Chinese for market access, but Tencent certainly isn’t hating that its new partner has access to billions of Americans’ data and is close to U.S. policymakers. A company with Sony’s reputation and long-standing relationship with Washington officials has a far easier time getting its wishes granted. Sony donated nearly $750,000 to candidates and spent more than $5.5 million on lobbying in the last two years — almost all directed to Democrats, and it has a reputation of successfully using its money to buy their support.
So, predictably, Sony now wants the Biden administration to protect the video game market that it controls with its CCP-funded partners. Seemingly to prevent greater competition from arising to Sony’s PlayStation, it wants the administration to block Microsoft’s proposed acquisition of game developer Activision, which would allow Microsoft to strengthen its marketplace position and put a damper on the anti-free market activities Sony uses to keep the gaming industry under its control.
Using the force of government to make liberal sweetheart Sony and Tencent even more powerful would come at great expense to America’s national security.
Most already know about the dangers that China’s TikTok poses to America’s national security, but Sony’s partner Tencent — which is owned by TikTok’s parent company, Bytedance — is far worse. Through its ownership stakes in companies such as WeChat, Snapchat, Spotify, and Tesla and partnerships with ones such as Sony, this firm — the 10th wealthiest one in the world , whose data collection practices have already received significant scrutiny — may be able to collect more information on the public than any other company.
As the BBC’s China media analyst, Kerry Allen, made clear , Tencent “has a business model that other Chinese companies can only envy — it can reach an audience of, basically, everyone.”
By blocking a harmless merger, the Biden administration would be using its power to effectively help block the private marketplace competition that would shrink the size of the CCP’s large gaming data net. Indeed, the Biden Federal Trade Commission voted 3-1 to advance Sony’s complaint, which is not determinative but is often influential in governmental merger decisions.
American business and government leaders, including the Biden administration, have recently turned a critical eye toward dealings with Chinese firms thanks to recent events, including the spy balloon that traversed the country. Some seek to ban TikTok, while others are demanding increased divestment from CCP interests. Yet, though the Biden White House has expressed sympathy with this movement and has, in some cases, even expressed interest in leading it, it’s now opting to help a Democratic corporate ally in a way that will only make China’s abuses worse. Why?
Time will tell whether this Biden FTC challenge is ultimately successful, but let’s hope not. China already gains enough power, data, and ground against the United States on its own accord. The last thing the U.S. needs is for its policymakers to do Xi Jinping's dirty work for him.
Paul Boardman is Chairman of Decouple China PAC
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