Tencent, the Chinese technology conglomerate, is reducing its stake in JD.com, China’s second-largest e-commerce company, by giving away a majority of the stock. Tencent is divesting $16.4 billion by issuing a one-time dividend, distributing the shares to its shareholders while weakening ties with the e-commerce company and putting future plans with its holdings into question. The move comes in response to increased pressure from the Chinese government on the country’s biggest technology companies in an attempt to rein in their perceived power. Prior to the divestiture, Tencent was the largest shareholder in JD.com. Now, its stake is being reduced from roughly 17% to 2.3%, leaving Walmart as JD.com’s top corporate benefactor.
While it is most well known for its social media app, WeChat, Tencent is also a prolific investor, with significant stakes in Epic Games, Tesla, Activision Blizzard, and hundreds more companies. However, in 2021, Chinese regulators blocked the company’s attempted merger of Huya and DouYu, the country’s two largest video gaming sites—just one example of the government asserting its authority over China’s “big tech” industry. As a result of the Tencent dividend deal, JD.com’s stock price plunged more than 11% before settling on a 7% decline, while Tencent’s stock rose by 4% in the announcement’s aftermath.