Tencent is negotiating with US authorities to keep Riot and Epic stakes
The US government body has the power to force Tencent to divest.
A new Reuters report reveals that Tencent Holdings has been in talks with the Committee on Foreign Investment in the United States since late 2020, in order to ensure it can keep its stakes in Riot Games and Epic Games. Depending how the talks play out, the CFIUS has the power to force the China-owned corporation to divest from both companies.
The motivation for CFIUS’s interest is familiar: It needs Tencent to prove that its handling of US personal data is not a national security risk. Reuters writes that Tencent is “negotiating risk-mitigation measures,” though the details on what these measures could be aren’t known. Tencent owns Riot Games outright, while its stake in Epic Games is 40 percent, but that could change entirely if the CFIUS isn’t satisfied.
The report isn’t too surprising. Last year former US president Donald Trump issued an executive order banning any transactions related to the China-owned TikTok social media platform, as well as the Tencent-owned WeChat. Oracle was in line to claim TikTok’s US operations, but according to the South China Morning Post those Oracle talks collapsed in February, with a source saying “the deal was mainly designed to entertain demands from the Trump administration.”
That doesn’t mean the Biden administration has softened its approach to China on the matter of personal data protection, as Reuters points out. Riot Games refused to comment on the report, claiming it worked independently of Tencent. Meanwhile, the report says Epic Games has not shared user data with Tencent.