Tencent Negotiating With U.S. Government To Keep Possession Of Riot And Epic

When then-President Donald Trump launched his crusade against Chinese tech companies late last year, there was concern that gaming companies that do business in the U.S. might also face unwanted scrutiny. Specifically, the Committee on Foreign Investment in the U.S. "sent letters to companies, including Epic Games Inc., Riot Games and others, to inquire about their security protocols in handling Americans’ personal data." (Riot is fully owned by Tencent, as is 40% of Epic.)

In my article about these actions in September, I reasoned that "Money talks, and Tencent has a lot invested in American companies and gamers, so don’t be too surprised if some sort of deal is brokered before things get too antagonistic." It seems like that's exactly what's happening.

A Reuters report stated that Tencent "is negotiating agreements with a U.S. national security panel that would allow it to keep its ownership stakes in U.S. video game developers Riot Games and Epic Games." The Committee on Foreign Investment in the United States (CFIUS) has been examining how Tencent and its subsidiaries handle Americans' personal data and whether that poses a security risk due to the company's ties to the Chinese government.

While Reuters could not confirm the substance of these talks, it believed that they might include "appointment of independent auditors to monitor the implementation of ... risk-mitigation measures." One source said that Epic is not sharing information with Tencent and also cautioned that "there is no certainty that Tencent will clinch deals to keep its investments."

Reuters reported that President Joe Biden has continued his predecessor's "hawkish stance against China" but has based it more on "geopolitical issues" than perceived personal affronts. CFIUS has the authority to force foreign companies to sell off their subsidiaries but the Biden administration has not yet enforced such measures.

Will it do so with regards to Tencent? And if it does, what will that mean for players of League of Legends or Fortnite? As to the first, I can't say, but I still think that there's too much money involved for Tencent to surrender easily. Today's news indicates that the Chinese company is willing to negotiate to keep its interests, and I suspect the two sides will eventually come to an agreement.

If they don't? Well, I don't think that means Riot or Epic will shut down, since, again, their games make lots and lots of money. It probably won't be any different than when the companies were acquired (partially or fully) in the first place, which, despite the usual paranoia that accompanies such transactions, rarely results in any ill effects.