US officials are currently debating whether to force the Chinese company to divest some of its largest gaming investments, such as Riot Games and Epic Games.
According to a Financial Times report, which has been picked up by regional tech media outlets such as GameDeveloper, senior officials in the Trump administration are currently divided over the possibility of allowing the Chinese company to hold its stakes in some of the biggest gaming firms in the US and Finland, with the meeting between President Donald Trump and Chinese President Xi Jinping scheduled to take place shortly, with the gaming portfolio of the Chinese company to be discussed.
Apparently, the officials are concerned with the full ownership of Riot Games, the Los Angeles-based game development studio responsible for League of Legends and Valorant, and its 40 percent stake in Epic Games, the maker of the popular Fortnite game and Unreal Engine game development software. Discord has similarly been identified as part of the U.S. assets that could be subject to the forced sale drive.
The Committee on Foreign Investment in the United States (CFIUS) has been scrutinizing the stakes that Tencent owns in Riot Games, Epic Games, and Supercell, with concerns that Chinese national security laws could give the government leverage over the data of millions of Western gamers, according to previous reports. The company has been in negotiations to arrange “risk mitigation” measures to retain its stakes in the gaming firms.
CFIUS can demand structural changes or force foreign investors to unwind U.S. deals entirely, and it is using these powers more aggressively under the Biden and Trump administrations. In fact, Tencent Holdings recently chose to exit its planned role in Paramount Skydance’s bid for Warner Bros. Discovery precisely because it did not want to invite a review by CFIUS.
If policymakers take a hard stance against Tencent, it could force it to sell its stakes in Riot Games, Epic Games, and Supercell to new owners in the United States and its allies, or force it to live with far more draconian data and governance restrictions around its gaming subsidiaries. Changes to ownership structures at Riot Games, Epic Games, and Supercell would have significant implications for live service games like League of Legends and Fortnite, and Unreal Engine, which is used for thousands of games globally, even if day-to-day operations continue unaffected in the near term.
