The Trump administration is engaged in intense discussions over whether to allow Tencent to continue holding stakes in US and Finnish gaming companies, according to Reuters. The debate centers on Tencent’s investments in Epic Games, Riot Games and Supercell, involving globally popular titles such as Fortnite, League of Legends and Clash of Clans.
Sources familiar with the matter said US cabinet officials had initially planned to meet on March 4, but the meeting was postponed due to scheduling conflicts. The key issue under discussion is whether Tencent’s investments pose national security risks, given that game companies hold sensitive data including financial information, personal details and chat records of hundreds of millions of users.
In the case of Epic Games, its Unreal Engine is widely used in gaming, film production and military simulation, with a vast scale of user data involved.
Tencent currently holds a 28% stake in Epic Games and fully owns Riot Games and Supercell. The three companies’ gaming products reach more than one billion players worldwide, with a significant share of users in the US.
The Committee on Foreign Investment in the United States (CFIUS) began reviewing Tencent’s investments in Epic Games, Riot Games and Supercell during the Trump administration, and the case has since become one of the agency’s longer-running reviews. The investments are viewed as potentially involving sensitive data of a large number of US users.
During the administration of Joe Biden, differences emerged among US government agencies over how to address the issue. The Justice Department was inclined to pursue tougher measures, including requiring Tencent to divest some or all of its holdings, while the Treasury Department favored allowing the investments to remain in place subject to mitigation measures such as data segregation.
As the agencies failed to reach consensus, the review has remained unresolved for an extended period.
As of now, Tencent and the gaming companies involved have yet to respond. Market participants widely worry that any forced divestment by the United States could rattle the global gaming supply chain and further intensify the technological decoupling between China and the United States.
The outcome of the case could reshape the rules governing cross-border technology investment and may become a landmark example of the tensions between national security concerns and commercial interests in the digital era.
Tencent’s investment history in the three major gaming companies is as follows:
- Riot Games – Tencent began investing in Riot Games in 2008 and completed a full acquisition in 2011, making it a wholly owned subsidiary. Riot Games is best known for developing League of Legends.
- Epic Games – Tencent acquired a 28% stake in Epic Games around 2012, through multiple rounds of investment. Epic Games is the developer of Fortnite and the widely used Unreal Engine.
- Supercell – Tencent, as part of a consortium led by SoftBank, acquired a significant stake in Supercell in 2016, and later increased its holdings to become the controlling shareholder. Supercell is famous for Clash of Clans and Clash Royale.
