Tencent has been negotiating with a US government agency that assesses acquisitions for national security since last year. This is reported by Reuters citing sources. It would be about preserving the stakes in Riot Games and Epic Games.
According to Reuters, the negotiations are between Tencent and the Committee on Foreign Investment in the United States. This body has the power to force Tencent to divest its interests in US holdings. According to the sources, this has been discussed since the second half of last year, but there is no assurance that Tencent will be able to close deals to secure its investments.
The agency is said to have investigated how Epic Games and Riot Games handle users’ personal data and whether there would be a risk to American national security in this regard, knowing that it concerns Chinese property and therefore the chance that the Chinese Communist Party could become involved. access to private information of Americans. One of the sources allegedly said that Epic Games does not share user data with Tencent. A Riot Games spokesperson said that his company operates independently of Tencent and has implemented sound measures to protect player data.
Negotiations would include measures to contain the risks and aim to ensure that Tencent can maintain its investments. Further details about possible outcomes are unknown, but in cases like this it can happen that a company has to divest its interests, or that a regulator is set up to monitor any measures.
Tencent is the largest game company in China and owns 40% of Fortnite maker Epic Games. Activision-Blizzard is also owned for a small percentage by the Chinese company. Riot Games, the developer behind League of Legends and Valorant, is wholly owned by Tencent. The Chinese company also invested $150 million in Reddit in 2019 and has stakes in Discord and Snap.
It appears that President Biden’s current US administration is broadly continuing its hardline policy toward China. In recent years, the said government agency has looked quite closely at Chinese investments and interests in American technology, including the alleged Chinese data collection. In that context, the US already imposed a trade ban on TikTok and WeChat, although this was later reversed and the current lawsuit about this is still pending.