US government looking into Tencent dealing with Riot, Epic Games and more

US government looking into Tencent dealing with Riot, Epic Games and more

Reports confirm that the U.S. government is asking gaming giants such as Epic Games and Riot Games about its dealings with Tencent Holdings.

Along with President Donald Trump’s order to ban ByteDance’s TikTok, was a separate EO ban on WeChat, owned by Tencent. Upon the release of WeChat’s ban order, there were concerns about how this will affect the Chinese conglomerate’s other dealings.

Micky News previously reported about this possible confusion. As mentioned before, Tencent is quite influential in the gaming industry. Nonetheless, the White House clarified with the LA Times that the order excludes those “involving other Tencent holdings.”

Although, the effect of this order might affect the gaming giants at some point. In fact, Activision has reportedly cut ties with Tencent following the U.S. ban.

Committee on Foreign Investment’s Tencent inquiries

Bloomberg reports that the Committee on Foreign Investment (CFIUS) has sent letters to companies involved with Tencent. Two of which that were named are Epic Games and Riot Games.

But Tencent also has majority shares in Activision Blizzard, Roblox Corporation, Supercell, and Ubisoft. The Chinese conglomerate’s influence doesn’t stop with gaming giants as it also has stakes other digital platforms such as Reddit, Discord, and Snap Inc (Snapchat creator), per Polygon

The letter reported entails an inquiry about the tech and gaming companies’ protocols in “handling Americans’ personal data.”

Bloomberg highlights that the CFIUS inquiry “builds on the Trump administration’s heightened scrutiny of Chinese companies and their ties to U.S. firms.”

Another “forced divestment” about to happen?

Bloomberg Intelligence analysts, Vey-Sern Ling and Tiffany Tam, explains that Tencent’s gaming in the U.S. “may be at risk of forced divestment.”

This possibility was seen in observation with the government’s management on ByteDance’s TikTok. “We estimate Tencent’s U.S. assets could be worth at least $22 billion, and account for 6-7% of its sales and profits,” the analysts further highlighted.

Former deputy assistant secretary for CFIUS’ investment security told the same news outlet that “[w]hen you’re talking about massive amounts of data, there’s probably something for the committee to look at.”

He further explains:

“The question then becomes is the risk high enough that it actually warrants forcing deals apart.”

Tencent has 40% shares in Epic Games while wholly owning subsidies in Riot Games. Furthermore, PC Gamer notes that the Chinese conglomerate has “over 300 investments in its portfolio.”

It is still not certain as to what the results of this CFUIS inquiry will be. Hopefully, the public will know more after the Commerce Department announces the scope of Trump’s ban on WeChat and TikTok around September 20.

 

Featured image courtesy of Chris Yunker/Flickr

Micky is a news site and does not provide trading, investing, or other financial advice. By using this website, you affirm that you have read and agree to abide by our Terms and Conditions.
Micky readers - you can get a 10% discount on trading fees on FTX and Binance when you sign up using the links above.