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According to a recent report by REUTERS, popular Chinese business conglomerate, Tencent, might be in negotiation to retain stakes in both Riot Games and Epic Games, both of which are based out of the United States.
Tencent is the world's largest video game vendor, as well as one of the most financially valuable companies. It is among the largest social media, venture capital, and investment corporations. Its services include social networks, music, web portals, e-commerce, mobile games, internet services, payment systems, smartphones, and multiplayer online games.
Recently, it was reported that Tencent might be in negotiation with US officials for an agreement to retain its 40% stake in Epic Games and complete ownership of Riot Games.
Tencent reportedly in negotiation to retain stakes in Riot Games and Epic Games
According to the report, Tencent is currently negotiating with the Committee on Foreign Investment in the United States (CFIUS) to sustain its stake in US-based companies. Back in the second half of 2020, CIFUS ordered Tencent to divest its U.S. holdings.
The report further adds that CFIUS has been investigating whether Riot Games and Epic Games' handling of personal data of their users constitutes a national security risk because of their Chinese ownership.
Tencent is apparently negotiating possible risk migration methods with CFIUS in order to maintain its US-based investments. Even though details regarding the negotiation haven’t been disclosed, the negotiations could lead to a ring-fenced investment, with the appointment of independent auditors to monitor the implementations.
The concerns regarding Chinese companies
Previously, back in September of 2020, the Trump administration banned WeChat, owned by Tencent, along with TikTok, a social media application owned by another Chinese tech giant, ByteDance. Even though TikTok did not get banned in the U.S. due to preliminary injection, it has been banned in several other countries, including India, due to its ownership by a Chinese company.
Other than TikTok, the mobile version of the popular battle royale game PlayerUnknown Battleground, commonly known as PUBG Mobile or PUBGM, was also banned in India back in 2020. PUBG mobile and TikTok were part of a larger ban, including 220 Chinese developed applications, due to concerns regarding data security.
Huawei, another Chinese tech giant, was also blacklisted due to data security concerns. This led to Huawei not being able to include Google Play services in its mobile devices. Recently Huawei has been trying to develop their own Harmony OS, to provide an alternative to Android.
There has been continuous concern about data security in recent years across multiple countries regarding Chinese businesses. Even though Tencent originated from China, it has massive investments in multiple businesses across the world.
The Tencent Gaming Empire: Riot Games, Epic Games, and more
Tencent is the world's largest video game vendor, as well as one of the most financially valuable companies.
Tencent has invested in multiple gaming companies, including major AAA developers and publishers such as Ubisoft and Activision Blizzard. However, the concern negotiation is regarding Epic Games and Riot Games.
Epic Games is not only the developer of the popular commercially successful video game Fortnite, but it is also the owner of the PC video game storefront, Epic Games Store (EGS). Recently, Epic Games has been having a massive legal battle with Apple.
Riot Games is well known as the developer of the popular titles like League of Legends, League of Legends: Wild Rift, Ruined King, and Legends of Runeterra.
Back in 2020, Riot Games published its first FPS esports title, Valorant, which became an instant hit and drew in a massive player base. In addition to developing and publishing games, Riot Games also hosts massive esports tournaments such as the Valorant Champions Tour and the League Championship Series. Tencent currently owns 100% of Riot Games.
Even though both Epic Games and Riot Games have described Tencent as “hands-off owners,” the looming security risk due to Tencent’s Chinese origin is apparent.
