Tencent, which is facing increased scrutiny of its past acquisition and joint-venture deals domestically, is reportedly in talks with a U.S. government panel for agreements that would allow it to keep its investments in two American video game companies.
The negotiations with the Committee on Foreign Investment in the United States (CFIUS) began in the second half of last year, possibly involving some risk-mitigation measures that would exempt Tencent from having to sell its stakes in Riot Games and Epic Games, of which the Chinese tech giant now controls 100% and 40% respectively, Reuters reported on Thursday, citing sources close to the matter.
The sources did not provide details of the measures Tencent is negotiating, but they typically involve prohibiting the owner of a firm from operations that have national security implications and hiring independent auditors to monitor the implementation of these agreements.
CFIUS, a Treasury Department-led panel that has the authority to scrutinize foreign investments, has been reviewing whether Riot Games and Epic Games’ handling of player data constitutes a national security risk because of their Chinese ownership, according to Reuters.
A Riot Games spokesperson told Reuters that his company operates independently despite being wholly owned by Tencent and that it has implemented industry-leading practices to protect player data.
In recent years, the U.S. has boosted scrutiny of past Chinese investments especially in the tech sector amid an intensifying race between the world’s two largest economies for global technology leadership.
Contact reporter Ding Yi (email@example.com)