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Published: May 10, 2021

Written by: Edward Pearcey

  • Tencent is looking into ways to retain its US-focused assets amid a US Committee on Foreign Investment investigation
  • Under the Biden’s administration, the Committee is more focused on establishing facts rather than prosecute Chinese investors
  • Reuters’ report has not shed many details, but Tencent should retain its important position in the US gaming market

Tencent is determined to retain its ownership of Riot Games and 40% stake in Epic Games amid tensions between the United States and China.

Tencent’s Assets in the US at Stake

Regardless of current diplomatic tensions between China and the United States, Tencent is negotiating a strategy to retain its ownership of Riot Games and stake in Epic Games, the creators of video game blockbusters League of Legends and Fortnite respectively.

The news comes from a Reuters report published last week and talks in detail about an ongoing investigation against the Chinese gaming giant by the US Committee on Foreign Investment (CFI), which is trying to determine whether US players’ consumer data has been used to identify weaknesses in national security.

If the Committee chooses to press on, it’s legally capable of demanding from Tencent to divest its stakes from the two companies. However, according to Reuters sources, the dialogue between the Committee and the Chinese company has softened and a possible solution is at hand.

However, no specific details have been revealed to Reuters nor the public. Neither party has offered to comment on whether these talks are ongoing and what their purpose is. Tencent has a lot to lose from the countries’ bilateral relations turning sour as it bought out Riot Games in 2015, upping its investment from 2011, and becoming the sole owner, and then snapping up 40% of Epic Games.

Tencent holds significant clout on the Chinese gaming market, but it’s also a host of the instant messenger platform WeChat. The company similarly invests in other gaming giant around the world, including Supercell, Activision Blizzard, Krafton, Ubisoft, and others.

Negotiating with US Easier under Biden’s Administration

Following the presidency of US President Donald Trump, Chinese companies have received a lot of attention by the CFI, which has actively scrutinized big corporations from China with interest in various industries in the United States.

Even the incumbent, US President Joe Biden, has not reversed his stance on pursuing Chinese conglomerates and their investments in the country, although his administration could be more willing to negotiate rather than foment fear of foreign investment.

Interestingly, President Biden’s administration didn’t follow up on an executive order by President Trump forcing ByteDance to cede its ownership of TikTok. Data vulnerabilities have been an important topic and Tencent’s name has been often cited as the reason why certain restrictive moves have been carried out.

In September 2020, India banned PlayerUnknown’s Battlegrounds: Mobile (PUBG) citing data breaches and rising tensions between India and China, and a brief military flare-up along their borders. Krafton, though, is now bringing PUBG back to India under a new name, Battlegrounds Mobile, with many of the previous qualms hopefully overcome.

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