HONG KONG (REUTERS) - Billionaire Pony Ma, the low-profile founder of Tencent Holdings, China's biggest social media and video games company, met with antitrust watchdog officials this month to discuss compliance at his group, three sources with direct knowledge of the matter told Reuters.

The meeting is the most concrete indication yet that China's unprecedented antitrust crackdown, which started late last year with unrelated billionaire Jack Ma's Alibaba business empire, could soon target other Internet behemoths.

Beijing has vowed to strengthen oversight of its big tech firms, which rank among the world's largest and most valuable, citing concerns that they have built market power that stifles competition, misused consumer data and violated consumer rights.

Tencent, whose WeChat messaging and payment mobile app is ubiquitous in China, is expected to be the next in line for sharper antitrust regulatory inquiries, said the sources.

News of the meeting, which has not been previously reported, came ahead of Tencent's December quarter results on Wednesday, in which the company reported a forecast-beating 175 per cent rise in quarterly profit, helped by a surge in gaming revenues.

Speaking to reporters following the earnings announcement, Ma said the company was "working actively" with regulators on compliance, including combing through some of its previous investments. He did not refer to the meeting.

Tencent President Martin Lau said the company's interaction with the antitrust watchdog was part of the normal course of business. "We, Tencent, conduct meetings with regulators on a regular basis and this is one of the regular meetings that we have," Lau said.

"During the meeting, we had a discussion about a broad range of topics, and the main focus was actually on creating a healthy environment for innovation."

Ma, who seldom gives media interviews and had been out of the public eye for more than a year, was in Beijing this month for China's annual parliamentary meeting and visited the State Administration of Market Regulation (SAMR) office the week before last, said the people.

Mr Pony Ma, who seldom gives media interviews and had been out of the public eye for more than a year, was in Beijing this month for China's annual parliamentary meeting and visited the State Administration of Market Regulation (SAMR) office the week before last, said the sources.

The Tencent chairman and chief executive, ranked this month as China's second-richest person with a US$74 billion (S$99.6 billion) fortune, is a parliamentary delegate with Guangdong province, where the company is headquartered.

Tencent requested the meeting with SAMR deputy head Gan Lin and other senior officials, said the sources.

Tencent and SAMR did not respond to Reuters requests for comment.

At the meeting, the two parties discussed how Tencent could better comply with antitrust rules, two of the sources said.

SAMR anti-monopoly bureau head Wu Zhenguo, who was also at the meeting, expressed concern about some of Tencent's business practices, and asked the group to comply with antitrust rules, one of them said.

SAMR is currently gathering information and looking into monopolistic practices by WeChat, and how the super app has possibly squashed fair competition and squeezed smaller rivals, two of the sources said.

All the sources declined to be named due to the sensitivity of the matter.

Tencent shares dropped as much as 1.7 per cent in a weaker Hong Kong market to touch the day's lowest level after the Reuters report.

Corrective action

The meeting between Mr Pony Ma and the antitrust officials came a few days after he called for tighter governance of the Internet economy at the parliamentary meeting.

Mr Pony Ma's discreet public profile is in sharp contrast to that of Mr Jack Ma, whose public criticism of China's regulators triggered a chain of events that resulted in the last minute halting of fintech affiliate Ant Group's US$37 billion initial public offering last November.

One of the sources said that Tencent had not been officially notified by SAMR of any investigation into its activities, but is expecting to hear from the regulator soon.

"As one of China's big two, it's perfectly normal that Tencent felt anxiety about being targeted," said lawyer You Yunting from Shanghai-based DeBund Law Offices, referring to Mr Pony Ma's meeting with the regulatory officials.

"There are two worries for Tencent: A concentration of undertakings review could impact acquisition deals, while investigations and litigations on abuse of dominant market positions could hurt the advantage of its platforms."

To cushion the impact of any potential moves against it, Tencent has been scrambling to take corrective action.

The company is having to offer concessions in a plan to merge the country's top two video game live-streaming sites in order to resolve antitrust concerns, Reuters reported on Tuesday.

In a separate deal, the firm, which held a 5 per cent stake in local gaming firm Zhejiang Century Huatong Group, had also planned to buy another 10 per cent, said one of the sources and another source with direct knowledge, making it the largest shareholder.

Earlier this month, however, Tencent acquired another 5 per cent of Century Huatong instead and became the second-largest shareholder, looking to avoid a potentially lengthy and complicated antitrust approval process, the two sources said