US government probes Riot, Epic Games over Tencent ownership

Steven Rondina • September 18, 08:00

When United States president Donald Trump made moves to shut down WeChat and TikTok from operating in the USA, it led to questions whether it would have killed League of Legends, Fortnite, and a number of other games with financial ties to China. Those concerns were briefly alleviated, but now it appears that the story isn’t yet over.

According to a report by Bloomberg, the Committee on Foreign Investment in the United States, which is a division of the US Treasury Department, has made inquiries into a number of prominent video game studios with connections to Tencent Holdings. Though a full list of companies wasn’t given, Bloomberg specifically points to Fortnite publisher Epic Games and League of Legends publisher Riot Games as companies that were approached.

CFIUS’s specialty is looking into the national security implications of investments into and acquisitions of American companies by foreign entities. The committee has the power to reject proposed foreign acquisitions of American companies and force companies into divesting from American companies or selling the company.

The most notable example of CFIUS action in recent years was its 2019 demand that Beijing Kunlun Tech Co. sell dating app Grindr due to national security concerns.

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Tencent Holdings does extensive work for Chinese government

Earlier this year, Trump made moves to force China-owned social media platform TikTok to sell to an American company due to national security concerns. Alongside this were demands for a similar sale of WeChat, a Chinese social media platform owned by Tencent Holdings, under threat of not being able to receive money from American users.

The unclear language behind the order briefly left it unclear whether this applied specifically to WeChat or to all entities financially tied to Tencent. Tencent wholly owns Riot Games, owns 40% of Epic Games, and owns smaller shares of publishers such as Ubisoft, Activision Blizzard, and more. White House officials stated hours later that this would not be applied to Tencent’s video game interests.

The demands stem from cybersecurity concerns similar to those that have forced mobile device manufacturer Huawei out of the United States. Tencent has been shown to work to appease Chinese president Xi Jinping

Trump isn’t alone in having these concerns. Last week, the Indian government banned dozens of apps made by Chinese developers including a variety of social media apps and tools such as calendars and flashlights amid escalating tensions with China. Also on that list is PUBG Mobile, one of the most popular mobile games in the world and a game that was developed by Tencent.

The key difference between WeChat or PUBG Mobile and games developed by Riot Games and Epic Games is that such games as League of Legends and Fortnite are developed by American companies rather than by Tencent. This likely means that they will avoid the sweeping action that TikTok and WeChat were subjected to.

But if tensions between Trump and China continue to escalate, it’s hard to be sure of what might happen next.