How is Tencent Catching up with Facebook: Empirical Analysis using Patent Citation Data

Abstract

This paper examines Tencent’s economic performances over time in terms of its technological catch-up and business strategies, with Facebook as a benchmark. Patent and citation data from 2010 to 2019, extracted from the Worldwide Patent Statistical Database (PATSTAT), was used to analyze the technological catching up made by Tencent and Facebook. Results indicate that Tencent has overtaken Facebook in terms of market performances, and that the overtaking in the number of patents preceded that of the market performances, but Tencent has not yet overtaken Facebook in terms of the quality of patents. Tencent has surpassed Facebook in terms of technological independence from external sources and further widened the gap in this aspect over the years. Patterns in the cycle time of the patented technology and citations of non-patent scientific literatures illustrate Tencent’s strategies to seek a niche using recent technologies and avoid issues related to intellectual property rights. Overall, there is some evidence that technological prowess contributes to Tencent’s overtake of Facebook in market performances.