Tencent acquires major Chinese social network from Google

China’s largest online company, Tencent, has bought Beijing-based social networking provider Comsenz from search giant Google and VC firm,Sequoia Capital for $60-million.

Comsenz is the developer of Discuz, China’s most-used bulletin board system (BBS), with a reported 80% of Chinese sites running the BBS, and 70%of other BBS systems built on Discuz.

The deal will further entrench Naspers, the South African media giant, in the Chinese market. Naspers has a 35% stake in Tencent, which is China’s premier online game operator and its largest instant messaging provider. Naspers also controls a 28.7% stake in Digital Sky Technologies (DST), the Russian internet company that has invested in Facebook, social network game creator Zynga and owns the mature instant messaging service, ICQ.

The sale comes after a period that saw Google at the centre of a tumultuous battle with the Chinese government over the issues of censorship and hacking, culminating in a withdrawal from the Chinese search market.

There is speculation as to whether this deal with Tencent is part of a broader move that will see Google cutting its contact further with the world’s largest internet market, or whether the deal was motivated purely on a business level.

Tencent is now positioned to be the dominant player in the increasingly competitive Chinese internet market, which has over 420-million users online.

Tencent’s stock price reacted negatively to the announcement, dropping by 3.3% yesterday, while Naspers shares also eased by 3.1% on the Johannesburg Stock Exchange.



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