Chinese publisher Tencent is the world’s largest video game company. Their wholly-owned subsidiaries include League of Legends developer Riot Games, Exiles developer Grinding Gear Games and British company Sumo Group. They own everything from Epic Games to Ubisoft to Silent Hill 2 reboot Bloober Team. Are you a game developer? There’s a good chance that at least one percent of your body belongs to Tencent. Maybe one of your toes.

Now it turns out that Tencent is also some kind of military operator. Or at least, that’s what the U.S. Department of Defense wants us to believe: they just randomly put the company on the notorious list of Chinese military-industrial complexes, along with lithium-ion battery maker CATL. This may make it difficult for Tencent to do business in the United States, but Tencent said it was all based on “misunderstandings.”

According to Bloomberg, the U.S. Department of Defense’s list of Chinese military-industrial enterprises dates back to an executive order issued by recently re-elected President Donald Trump in 2020, which aimed to prevent U.S. companies from investing in entities with ties to the Chinese military.

The list, officially known as Section 1260H, is updated annually and currently covers 134 companies, including mobile phone maker Huawei. Being present in the United States does not mean that the company in question will be immediately banned from doing business with the United States, but it will put pressure on the U.S. Treasury Department to impose sanctions. This could scare away investors: As of today (Tuesday, January 7), Tencent shares have fallen in Hong Kong, according to the BBC.

Tencent naturally says the whole thing was a mistake and that the designation won’t have a significant impact on their activities. “We are not a military company or supplier,” Tencent spokesman Danny Marti told the BBC. “Unlike sanctions or export controls, this listing has no impact on our business. Nonetheless, we will work with the Department of Defense to clear up any misunderstandings.”

I’m not a scholar of superpower geopolitics, but my understanding is that all of this is part of the U.S. effort to contain China economically, in military applications, and in connection with Chinese technology companies and research institutions. Below is a 2022 press release from the U.S. Department of Defense outlining this idea. extract:

“The Department of Defense is determined to emphasize and counter the People’s Republic of China’s civil-military fusion strategy, which supports the People’s Liberation Army’s modernization goals by ensuring that Chinese companies, universities, and the military acquire and develop advanced technology and expertise. Section 1260H directs the Department of Defense to begin Identify civil-military fusion contributors operating directly or indirectly in the United States.

Given the sheer scale of Tencent’s business – they are also involved in generating artificial intelligence and cloud computing, and own one of the largest social media networks, WeChat – it seems likely that they have military connections somewhere. But then again, so do many of the big American tech companies, such as Activision Blizzard and Microsoft. There are many connections between technology companies and the world’s armed forces.

All of this comes amid news that Tencent is considering acquiring Ubisoft with the help of its founding family, the Guillemot family. Previously, two Epic Games directors appointed by Tencent also resigned due to the U.S. Department of Justice’s investigation into potential antitrust violations.