The U.S. Committee on Foreign Investment might force China’s Tencent to sell its 90% ownership in Riot and 40% shares in Epic over national security worries put forward by U.S. national security panel.
The security concerns were put forward because of the nature of the data collection, handling, and storing the personal information of millions of U.S citizens through firms like Riot Games and Epic Games in which it holds a majority stake. Both companies cater to a sizeable volume of U.S.-based gamers and also hold the personal information of many citizens, sharing which with a Chinese Government-backed company might jeopardize the security of the US and its citizens.
Sources tell Reuters that the Chinese Giant is currently negotiating agreements with the U.S. Committee on Foreign Investment that would allow it to keep its ownership stakes in video game developers Riot Games and Epic Games. Tencent holds 100% ownership in Riot Games, 40% ownership in Epic Games, and a minority 5% stake in Activision-Blizzard.
If the security committee deems the investment as a security risk then Tencent will be forced to sell off or shut down its investments in these companies which will deal a major blow to its aggressive investment and globalization model.
Similar to Tencent, last year another Chinese company, Bytedance owners of the popular short video app TikTok was ordered to sell its app to a US-based business or face a complete ban. While the Biden administration hasn’t forced Bytedance to go through with the orders of last year, it hasn’t withdrawn the order yet and might implement it later after staffing key CFIUS (Committee on Foreign Investment) roles.
While Tencent is known for its hands-off approach with its investments and acquisitions, but if Tencent is forced to sell its majority stake to other big investment firms or ventures, then the same approach might not be followed and we might see drastic changes in the gaming landscape.
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