Tencent in talks with CFIUS to retain stakes in U.S. game developers

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Tencent Holdings Ltd., a Chinese Internet-based platform, is presently negotiating agreements with a national security panel, the CFIUS (Committee on Foreign Investment in the United States). This negotiation was initiated to hold onto its ownership stakes in Epic Games and Riot Games, the U.S.-based video game developers.

The Chinese technology firm is in talks with CFIUS since the 2nd half of 2020, sources with knowledge of the matter have cited. This discussion happened amid the escalating tensions between the two countries over national security threats posed by the Chinese ownership.

For those unversed, Tencent currently owns a 40% stake in Fortnite developer, Epic Games. Moreover, in 2011, the Chinese technology company had acquired a majority stake in Riot Games, followed by its total ownership in 2015. Sources added that Epic Games did not share any user data with Tencent. Epic Games, Tencent, and CFIUS declined to immediately respond to requests for comments on the ongoing risk-mitigation measures.

Despite high concerns over security, a spokesperson at Riot Games has revealed that the firm operates independently and implemented significant ‘industry-leading practices’ to safeguard the data of the players.

There has been a rapid increase in conflicts between Beijing and Washington on several fronts like human rights, trade, and the protection of intellectual property. Several other U.S. officials also have expressed their concerns about the possibility of losing citizens’ personal data at the hands of the Communist Party of China.

Seemingly, Epic Games and Apple are locked in a legal battle over access to the app store of the iPhone manufacturer. Epic Games has commented that the iPhone maker allegedly forces its developers to deploy its in-app payment systems and submit to the app-review guidelines, which discriminate against its rival products or brands. On the other hand, the technology company argues that the video game company broke the contract and introduced its own in-app payment system to circumvent the company’s commissions of up to 30%.

Source credit:

https://www.reuters.com/technology/exclusive-chinas-tencent-talks-with-us-keep-gaming-investments-sources-2021-05-05/