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it has invested in more than 800 companies, including a 12 percent stake in Snap and 5 percent in Tesla. By comparison, GV, formerly Google Ventures and the most active corporate venture capital arm in the United States, has invested in more than 500 companies.

Most important, Tencent is a platform operator. It runs WeChat, a mobile messaging app with social media and financial services abilities.

WeChat needs other companies to keep its one billion users glued to the app. An operating system and an app store in its own right, WeChat allows users to run miniprograms created and run by other companie

Those users can make purchases using WeChat’s payment system. Tesla, Airbnb and Starbucks all have their own WeChat miniprograms. So do most of major Chinese websites — barring those that WeChat forbids.

Friendly companies build miniprograms for WeChat. Tencent invested in China’s ride-sharing and bike-sharing companies because their users pay frequently, and Tencent wanted them to use WeChat Pay.

No matter how decent or humble Tencent may act, it’s a giant conglomerate with $24 billion in profit last year and spends much of it on investment. It picks winners and losers, but the winners won’t always be the best out there, thus harming innovation and efficiency.

It limits user access to other products and services. Its WeChat app doesn’t allow users to share links for merchandise on Alibaba’s Taobao online marketplace or for short videos on Douyin, TikTok’s Chinese sister company.

Tencent doesn’t just court the industry. It has also long tried to get close to the government. Compared with the sometimes defiant Alibaba, Tencent has long publicly underscored its willingness to comply fully with rules and regulations.

In April, the company said it would spend $7.8 billion on green energy, education, village revitalization and other pet topics of President Xi Jinping. In the view of Hong Bo, an internet commentator, Tencent is acting for self-preservation.

Tencent said it began testing facial recognition technology in April to verify the ages of avid nighttime players and has since used it in 60 of its games. In June, it prompted an average of 5.8 million users a day to show their faces while logging in, blocking more than 90 percent of those who rejected or failed facial verification from access to their accounts.

In the case of video games, the government has long blamed them for causing nearsightedness, sleep deprivation and low academic performance among young people. The 2019 regulations also limited how much time and money underage users could spend playing video games.

Tencent's app, WeChat, is currently the largest and most commonly used messaging system in the world, with almost 1 billion users.

"He's regarded as being a sort of low-profile, not particularly interlinked or interconnected premier. He's got probably the worst job in China.

it's not a sort of political power. It's administrative power," he said.

"Power is about initiating, setting frameworks, setting the agenda. Well you can see people doing that, but Li Keqiang is more of an administrator."

The company's founder, Ma Huateng, is China's third richest man, according to Forbes, just behind Jack Ma and Dalian Wanda founder Wang Jianlin.

Ma, who is also known by his nickname "Pony," founded Tencent, the company which owns WeChat, in 1998 with his university classmates.

, Premier Li is number two in China's power structure, but his influence is far from assured.

It is those restrictions which make working in the world of China's internet so complex and potentially dangerous.

China's Great Firewall is rising higher than ever

"One challenge for tech titans like Ma in the coming years is whether they can keep on the good side of the authorities

Since then, Wang has grown to be a powerful, feared figure among Chinese officials.

Jack Ma is without a doubt one of China's most powerful people and possibly the country's most public face internationally next to President Xi.

As a result of Xi and Wang's crackdown, conspicuous spending and flaunting of wealth by officials has shrunk dramatically and as a result, Wang's political capital has continued to rise.

Wang's rise could be complicated by his age. He'll be 69 at the upcoming 19th Party Congress, meaning by custom he should retire.

he's the flamboyant and personable former English teacher who likes to dance to Michael Jackson tunes.

"He's been an essential lieutenant for Xi ... the president would be a weakened force without him at the top table," he said, placing Wang second

Ma, whose Chinese name is Ma Yun, is the executive chairman and founder of Alibaba,

Ma's peer on the China rich list, has had to abandon a series of major international deals after coming under scrutiny from Beijing.

Most people can't see the day after tomorrow."

China's president and, more importantly, the general secretary of the Chinese Communist Party, analysts say Xi is already the country's most powerful leader since Paramount Leader Deng Xiaoping

Xi's power is only set to grow.

far more than his predecessors,

most recently Chen Min'er who was promoted as party secretary of Chongqing.

Guo Wengui, the US-based businessman and perennial thorn in the side of the Chinese Communist Party.

and the chess game itself goes on inside a highly impenetrable black box," he said.

On WeChat, those services are underpinned by its mobile payments system, WeChat Pay. Because payments is already tied into the messaging service, people can easily order meal deliveries, book hotels, hail ride-sharing cars and pay their bills. WeChat Pay itself has 900 million monthly active users.

People also use WeChat Pay to transfer money and to buy personal finance products. More than 100 million customers have purchased WeChat’s personal finance products, which managed over 500 billion yuan, or $74 billion, by the end of last September, Tencent has said. Its users can buy everything from bonds and insurance to money market funds through the app.

“He is renowned in China’s tech scene as an artist and philosopher, as well as for his fierce mission against anything that degrades user experience,”

In a four-hour speech earlier this year, he pondered the question of why there were not more ads on the messaging service, especially the opening-page ads that are the norm in many other Chinese mobile apps.

Mr. Zhang’s answer: Many Chinese spent a lot of time — about one third of their online time — on WeChat, he said. “If WeChat were a person, it would have to be your best friend so that you would be willing to spend so much time with it,” he said. “How could I post an ad on the face of your best friend? Every time you see it, you’ll have to watch an ad before you can talk to it.”

Tencent makes most of its money from online games so that it does not need to sell ads for revenue.

said Ivy Li, a venture capitalist at Seven Seas Partners in Menlo Park, Calif. “How comprehensive the surgery is going to be and whether the implementation will be twisted by all kinds of compromises is a big question.”

She added: “Facebook is trying to seek a balance between a public square and a private space in an increasingly polarizing society. The final result could be it will be abandoned by both.”

A model-driven business is something beyond a data-driven business. A data-driven business collects and analyzes data to help humans make better business decisions. A model-driven business creates a system built around continuously improving models that define the business. In a data-driven business, the data helps the business; in a model-driven business, the models are the business.

Netflix beat Blockbuster with software; it is winning against the cable companies and content providers with its models. Its recommendation model is famous and estimated to be worth more than $1 billion a year in revenue, driving 80% of content consumption

Amazon used software to separate itself from physical competitors like Borders and Toys “R” Us, but its models helped it pull away from other e-commerce companies like Overstock.com . By 2013 an estimated 35% of revenue came from Amazon’s product recommendations. Those models have never stopped improving

Third, incumbents will be more potent competitors in this battle relative to their role in the battles of the software era. They have a meaningful advantage this time around, because they often have troves of data and startups usually don’

Looking to produce more-resilient crops, Monsanto’s models predict optimal places for farmers to plant based on historical yields, weather data, tractors equipped with GPS and other sensors, and field data collected from satellite imagery, which estimates where rainfall will pool and subtle variations in soil chemistry.

Lilt, a San Francisco-based startup, is building software that aims to make that translator five times as productive by inserting a model in the middle of the process. Instead of working from only the original text, translators using Lilt’s software are presented with a set of suggestions from the model, and they refine those as needed. The model is always learning from the changes the translator makes, simultaneously making all the other translators more productive in future projects.

First, businesses will increasingly be valued based on the completeness, not just the quantity, of data they create

Second, the goal is a flywheel, or virtuous circle. Tencent, Amazon and Netflix all demonstrate this characteristic: Models improve products, products get used more, this new data improves the product even more

inVia Robotics builds robots that can autonomously navigate a warehouse and pull totes from shelves to deliver them to a stationary human picker. The approach is model-driven; inVia uses models that consider item popularity and probability of association (putting sunglasses near sunscreen, for example) to adjust warehouse layout automatically and minimize the miles robots must travel. Every order provides feedback to a universe of prior predictions and improves productivity across the system.

Fourth, just as companies have built deep organizational capabilities to manage technology, people, and capital, the same will now happen for models

Fifth, companies will face new ethical and compliance challenges.

The rise of China’s venture market “signifies a shift from a single-epicenter view of the world to a duopoly,” he says.

The surge also positions Asia’s investors to win stakes in markets that Western companies covet, or that have national security implications.

. “If you think that being the locus of invention gives you a boost to your GDP and so forth, that’s a deterioration of the U.S. competitive advantage.”

Although one of the biggest Asian investors is Japan’s SoftBank Group Corp. , which has tapped Middle Eastern money to create the world’s largest tech-investment fund, it is Chinese activity that is having the greatest impact.

China is creating unicorns—startups valued at a billion dollars or more—at much the same pace as the U.S., drawing on funding from internet giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. as well as more than a thousand domestic venture-capital firms that have raised billions of dollars a year for the past few year

Chinese-led venture funding is about 15 times its size in 2013, outpacing growth in U.S.-led financing, which roughly doubled in that time period

Most Chinese-led investment so far has gone to the country’s own firms, the Journal analysis found. Many of them, like the Yelp equivalent Meituan-Dianping, are household names with millions of customers in China, yet virtually unknown elsewhere.

Many Chinese tech companies are “at this critical size that the China market alone is not enough to support their business and valuation,

Madhur Deora, chief financial officer for Paytm, one of India’s biggest e-payments firms, says the company approached Alibaba affiliate Ant Financial instead of U.S. backers for funding in 2015 because Chinese mobile-internet innovations are “way far ahead of anything that’s happened in the U.S.

One reason China’s push into new technologies worries many in the U.S. is that, unlike the hunt for good returns that underpins most Western venture finance, a lot of Chinese investment is driven by strategic interests, some carrying the specter of state influence.

China is pushing hard into semiconductors, for which the government has provided billions of dollars in public funding, and artificial intelligence, where Beijing in July set a goal of global leadership by 2030

Mr. Lee, the venture investor, predicts that in the next five to 10 years Chinese tech companies will become pacesetters for tech-related development, vying with the likes of Alphabet Inc.’s Google and Facebook for dominance in markets outside the English-speaking world and Western Europe.

“All the rest of the world will basically be a land grab between the U.S. and China,

“The U.S. approach is: We’ll build a better product and just win over all the countries,” says Mr. Lee. The Chinese approach is “we’ll fund the local partner to beat off the American companies.”

Asia’s rise as a startup financier is even starker in the biggest venture investments—those of $100 million or more. These megadeals have become an increasingly important part of venture finance as valuations have ballooned, with their proportion of deal volume growing from around 8% in 2007 to around half of the total last year.

In Southeast Asia, a flood of Chinese money into local startups—such as the $1.1 billion Alibaba-led investment into Indonesian online marketplace PT Tokopedia last year—is drawing the region closer to China

Chinese money is also playing a big role in India, which, with a population of 1.2 billion, has been described as the next big internet market. Chinese and Japanese investors each led nearly $3 billion in venture finance in India last year, ahead of the nearly $2 billion in deals led by U.S. investors

“Think of strategic investments and M&A as playing a game of go,” said Mr. Tsai, the Alibaba executive vice chairman, at the investor conference last year. “In a game of go the strategic objective is to put your pieces on the chessboard and surround your opponent.”

Housing in the best cities has become too expensive for first-time buyers

Young people who have borrowed from a new generation of online lenders, like Mr. Ma’s Ant Group, have debts they increasingly resent.

For all of China’s economic success, a long-running resentment of the rich, sometimes called the wealthy-hating complex, has long bubbled below the surface. With Mr. Ma, it has emerged with a vengeance.

“An outstanding people’s billionaire like Jack Ma will definitely be hanged on top of the lamppost,”

The Communist Party seems more than willing to tap into that resentment. This could mean trouble ahead for entrepreneurs and private businesses

Some businesspeople say that the hostility toward Ant and Mr. Ma makes them wonder about the fundamental direction of the country.

“You can either have absolute control or you can have a dynamic, innovative economy,”

Mr. Ma has his own high-profile philanthropic projects, like several initiatives in rural education and a prize to help develop entrepreneurial talent in Africa.

He has long enjoyed a better reputation than his peers in manufacturing, real estate and other industries whose edge may derive from cultivating close government ties, ignoring the environmental rules or exploiting employees.

He is as famous for making bold statements and challenging the authorities. In 2003, he created Alipay, which later became part of Ant Group, putting his business empire square in the center of the state-controlled world of finance.

He sometimes subtly dared the government to punish his defiance. Regarding Ant’s business, he said on multiple occasions, “If the government needs it, I can give it to the government.” His top lieutenants repeated the line, too

. “Given what has happened, eventually Ant will have to be controlled or even majority owned by the state,” said Zhiwu Chen, an economist at the University of Hong Kong’s business school.

Today, Alibaba and its archrival, Tencent, control more personal data and are more intimately involved in everyday life in China than Google, Facebook and other American tech titans are in the United States.

Instead of disrupting the state system, the companies have cozied up to it. Sometimes they even help the authorities track people. Still, the government has increasingly seen their size and influence as a threat.

some pro-market people in China worry that the country is drifting toward the hard line of the 1950s, when the party eliminated the capital class, using language that compared capitalist leanings to impurities, flaws and weaknesses.

To these people, some of the language recently used by Eric Jing, Ant’s chairman, evoked the era. At a conference on Dec. 15, he said the company was “looking into the mirror, finding out our shortcomings and conducting a bodily checkup.”

China’s technology tycoons also slipped in the rankings after the United States placed hefty restrictions on tech exports to China. Zhang Yiming, the 39-year-old founder of ByteDance, TikTok’s parent company, stayed in second place — but his net worth dwindled 28 per cent to $35 billion.

Ma Huateng, also known as Pony Ma, 51, founder of the tech giant Tencent, fell to fifth place with a drop of $14.6 billion — almost a third of his wealth

Jack Ma, 58, founder of the Alibaba e-commerce company, slipped to ninth place from last year’s fifth spot after his net worth dropped 29 per cent.

Of particular concern to Commerce are so-called frontier models. The phrase, popularized in the Washington lexicon by some of the very companies that seek to build these models—Microsoft, Google, OpenAI, Anthropic—describes a kind of “advanced” artificial intelligence with flexible and wide-ranging uses that could also develop unexpected and dangerous capabilities. By their determination, frontier models do not exist yet. But an influential white paper published in July and co-authored by a consortium of researchers, including representatives from most of those tech firms, suggests that these models could result from the further development of large language models—the technology underpinning ChatGPT

The threats of frontier models are nebulous, tied to speculation about how new skill sets could suddenly “emerge” in AI programs.

Among the proposals the authors offer, in their 51-page document, to get ahead of this problem: creating some kind of licensing process that requires companies to gain approval before they can release, or perhaps even develop, frontier AI. “We think that it is important to begin taking practical steps to regulate frontier AI today,” the authors write.

Microsoft, Google, OpenAI, and Anthropic subsequently launched the Frontier Model Forum, an industry group for producing research and recommendations on “safe and responsible” frontier-model development.

Shortly after the paper’s publication, the White House used some of the language and framing in its voluntary AI commitments, a set of guidelines for leading AI firms that are intended to ensure the safe deployment of the technology without sacrificing its supposed benefit

AI models advance rapidly, he reasoned, which necessitates forward thinking. “I don’t know what the next generation of models will be capable of, but I’m really worried about a situation where decisions about what models are put out there in the world are just up to these private companies,” he said.

For the four private companies at the center of discussions about frontier models, though, this kind of regulation could prove advantageous.

Convincing regulators to control frontier models could restrict the ability of Meta and any other firms to continue publishing and developing their best AI models through open-source communities on the internet; if the technology must be regulated, better for it to happen on terms that favor the bottom line.

The obsession with frontier models has now collided with mounting panic about China, fully intertwining ideas for the models’ regulation with national-security concerns. Over the past few months, members of Commerce have met with experts to hash out what controlling frontier models could look like and whether it would be feasible to keep them out of reach of Beijing

That the white paper took hold in this way speaks to a precarious dynamic playing out in Washington. The tech industry has been readily asserting its power, and the AI panic has made policy makers uniquely receptive to their messaging,

“Parts of the administration are grasping onto whatever they can because they want to do something,” Weinstein told me.

The department’s previous chip-export controls “really set the stage for focusing on AI at the cutting edge”; now export controls on frontier models could be seen as a natural continuation. Weinstein, however, called it “a weak strategy”; other AI and tech-policy experts I spoke with sounded their own warnings as well.

The decision would represent an escalation against China, further destabilizing a fractured relationship

Many Chinese AI researchers I’ve spoken with in the past year have expressed deep frustration and sadness over having their work—on things such as drug discovery and image generation—turned into collateral in the U.S.-China tech competition. Most told me that they see themselves as global citizens contributing to global technology advancement, not as assets of the state. Many still harbor dreams of working at American companies.

“If the export controls are broadly defined to include open-source, that would touch on a third-rail issue,” says Matt Sheehan, a Carnegie Endowment for International Peace fellow who studies global technology issues with a focus on China.

What’s frequently left out of considerations as well is how much this collaboration happens across borders in ways that strengthen, rather than detract from, American AI leadership. As the two countries that produce the most AI researchers and research in the world, the U.S. and China are each other’s No. 1 collaborator in the technology’s development.

Assuming they’re even enforceable, export controls on frontier models could thus “be a pretty direct hit” to the large community of Chinese developers who build on U.S. models and in turn contribute their own research and advancements to U.S. AI development,

Within a month of the Commerce Department announcing its blockade on powerful chips last year, the California-based chipmaker Nvidia announced a less powerful chip that fell right below the export controls’ technical specifications, and was able to continue selling to China. Bytedance, Baidu, Tencent, and Alibaba have each since placed orders for about 100,000 of Nvidia’s China chips to be delivered this year, and more for future delivery—deals that are worth roughly $5 billion, according to the Financial Times.

In some cases, fixating on AI models would serve as a distraction from addressing the root challenge: The bottleneck for producing novel biochemical weapons, for example, is not finding a recipe, says Weinstein, but rather obtaining the materials and equipment to actually synthesize the armaments. Restricting access to AI models would do little to solve that problem.

there could be another benefit to the four companies pushing for frontier-model regulation. Evoking the specter of future threats shifts the regulatory attention away from present-day harms of their existing models, such as privacy violations, copyright infringements, and job automation

“People overestimate how much this is in the interest of these companies,”

AI safety as a domain even a few years ago was much more heterogeneous,” West told me. Now? “We’re not talking about the effects on workers and the labor impacts of these systems. We’re not talking about the environmental concerns.” It’s no wonder: When resources, expertise, and power have concentrated so heavily in a few companies, and policy makers are seeped in their own cocktail of fears, the landscape of policy ideas collapses under pressure, eroding the base of a healthy democracy.