July 25, 2021

Chinese antitrust regulator prevents Reuters from linking to Tencent’s $ 5.3 billion video game

© Reuters. File photo: A Tencent logo appears at its booth at the 2020 China Trade Fair (CIFTIS) held in Beijing, China on September 4, 2020. REUTERS / Tingshu Wang

China’s market controller said on Saturday that it was blocking Tencent Holdings’ (OTC) Ltd’s plan to merge the country’s first two video game streaming sites, Hua (NYSE 🙂 and Duo.

Tencent first announced plans to merge Hua and Duo, designed to streamline its stake in companies such as data firm Moptech, which is estimated to be 80% piece of the market with more than $ 3 billion and growing rapidly.

Tencent Hua owns 36.9% of the largest shareholding and a third of Duo, both companies listed in the United States and valued at $ 5.3 billion.

Reuters first announced a market management regulation (SAMR) plan to block the deal on Monday, which came after the regulator reviewed the additional concessions proposed by Tencent for the merger.

SAMR said that the combined market share of Hua and Duo in the video game live streaming sector will be more than 70% and that their merger will strengthen Tencent’s dominance in this market, with Tencent already having more than 40% market share in the online gaming activity segment.

Hua and Duo are ranked No. 1 and No. 2, respectively, as China’s most popular video game streaming sites, where users come to watch e-sports and follow professional gamers.

Tencent said in a statement, “We will abide by this decision, abide by all regulatory requirements, act in accordance with applicable laws and regulations, and fulfill our social responsibilities.”

The deal comes amid ongoing repression by Chinese technology companies from the government. Earlier this year, the anti-monopoly regulator fined e-commerce $ 2.75 billion. Alibaba (NYSE 🙂 For engaging in anti-competitive behavior.

It “fully respects the regulatory decision and actively cooperates with regulatory requirements to act in accordance with applicable laws and regulations,” Duo said.

Huya did not immediately respond to a request for comment.

In a note to the SAMR issued simultaneously with the announcement, Zhang Zhening, a member of the State Council’s trust committee, argued that the deal would prevent fair competition.

“If Hua and Duo merge, Duo’s original joint venture will become a wholly owned subsidiary of Tencent,” Zhang wrote.

“Considering factors such as revenue, active users, live streaming resources and other key codes, we can expect a link to eliminate or restrict fair competition.”

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