Former Tencent employee ordered to pay US$167,000 for breaching non-compete pact after joining TikTok owner ByteDance

Tracy Qu
·3-min read

A former employee of Tencent Holdings has been slapped by a Beijing court with a fine totalling 1.1 million yuan (US$167,000) for breaking a non-compete agreement with the company after he joined TikTok-owner ByteDance, heating up the rivalry between the two Chinese internet giants.

The Beijing No 1 Intermediate People’s Court on March 22 issued a ruling against Chen Shuo, who worked as a senior editor in Tencent’s content platform department for two-and-a-half years, for breaking the six-month non-compete clause in his employment contract with the Shenzhen-based company, according to court documents published on the official database China Judgements Online on March 31.

Chen, who left Tencent in March 2019 with an average monthly salary of 52,972 yuan, was found by the court to have been inside Beijing-based ByteDance’s offices, walking around the site with documents and speaking with the tech unicorn’s employees there on multiple days during one week in August 2019. Tencent provided video evidence of Chen’s presence inside ByteDance’s offices.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

The court ruled that Chen’s presence at ByteDance was “different from an ordinary visit”, while also citing email records provided by Tencent that were labelled “highly sensitive and confidential”.

A man is seen walking inside the Beijing headquarters of ByteDance, which operates short video apps TikTok and Douyin, on July 7, 2020. Photo: Reuters
A man is seen walking inside the Beijing headquarters of ByteDance, which operates short video apps TikTok and Douyin, on July 7, 2020. Photo: Reuters

Chen argued that he did not sign a new employment contract directly with ByteDance, and that he was just an “ordinary employee” at Tencent without access to confidential information, according to court documents. He also indicated that Tencent had no proof the video evidence was during his contract’s non-compete period, and that the video violated his privacy because it was taken without his consent.

He was ordered by the court to pay 953,500 yuan as compensation to Tencent and return the sum of 158,900 yuan he received from the company when the non-compete agreement was signed.

Tencent did not immediately respond to a request for comment.

The lawsuit comes amid the escalating rivalry between ByteDance and Tencent, which runs the world’s largest video gaming business by revenue and multipurpose super app WeChat, and the increased competition for tech talent in the world’s second-largest economy.

Tencent’s robust earnings belie looming regulatory challenges

ByteDance sued Tencent in February, alleging that its Hong Kong-listed rival was violating Chinese antitrust laws by restricting access to content from Douyin, the domestic version of TikTok. ByteDance is seeking 90 million yuan in compensation for restricting links to Douyin on Tencent’s WeChat and QQ social media platforms.

Last month, ByteDance said it was building a team to develop artificial intelligence chips, a move that aligns with the Chinese government’s push for self-sufficiency in semiconductors.

In September, ByteDance’s recruitment programme listed close to 1,000 new jobs in its nascent video gaming operations for this year. The company made its biggest video game acquisition to date in March by snapping up Moonton Technology, creator of the popular multiplayer online battle arena title Mobile Legends: Bang Bang, for an undisclosed sum.

Earlier, Moonton founder Xu Zhenhua, a former Tencent employee, was forced to pay the company a 19.4 million yuan fine in 2018 for breaking a non-compete clause. Recently, two other former Tencent employees were fined around 1 million yuan for joining Genshin Impact developer miHoYo, despite having signed non-compete agreements.

More from South China Morning Post:

This article Former Tencent employee ordered to pay US$167,000 for breaching non-compete pact after joining TikTok owner ByteDance first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2021.