US government probes Riot, Epic Games over Tencent ownership

Recent developments have reignited concerns about Chinese technology investments in the American gaming sector. When former President Donald Trump initiated actions to restrict WeChat and TikTok operations in the United States, this raised immediate questions about potential collateral damage to popular games like League of Legends and Fortnite that maintain financial connections to China. While initial fears were temporarily eased, the situation has evolved into a more complex regulatory examination that continues to unfold.

According to Bloomberg reporting, the Committee on Foreign Investment in the United States (CFIUS), operating under the Treasury Department, has launched inquiries targeting several prominent video game developers with ties to Tencent Holdings. Although the complete roster of affected companies remains undisclosed, Bloomberg specifically identified Fortnite creator Epic Games and League of Legends developer Riot Games as recipients of these investigative approaches.

CFIUS specializes in evaluating national security implications stemming from foreign investments and acquisitions involving American corporations. This interagency committee possesses substantial authority to block proposed foreign takeovers of US companies and can mandate that firms divest their stakes in American businesses or compel complete company sales.

The most prominent recent example of CFIUS exercising its powers occurred in 2019 when it required Beijing Kunlun Tech Co. to sell the dating application Grindr due to national security considerations. This case established a significant precedent for how the committee addresses perceived data privacy and security risks associated with foreign ownership of platforms handling sensitive user information.

Catch up on this story

• Tencent brings Chinese censorship to American shores
• Trump almost banned LoL in August
• PUBG Mobile banned in India due to Tencent connection

Earlier this year, the Trump administration moved to compel the sale of China-owned social media platform TikTok to an American entity, citing national security risks. Simultaneously, officials demanded similar divestment of WeChat, the Chinese social media platform owned by Tencent Holdings, threatening to block its ability to process payments from American users if compliance wasn’t achieved.

The ambiguous wording in the executive order initially created confusion about whether restrictions applied exclusively to WeChat or extended to all organizations with financial links to Tencent. The Chinese conglomerate maintains complete ownership of Riot Games, controls 40% of Epic Games, and holds minority positions in other major publishers including Ubisoft and Activision Blizzard. White House representatives clarified several hours later that these measures wouldn’t impact Tencent’s video game investments specifically.

These regulatory demands originate from cybersecurity apprehensions mirroring those that led to the exclusion of mobile device manufacturer Huawei from US markets. Tencent has demonstrated patterns of cooperation with Chinese governmental priorities and initiatives aligned with President Xi Jinping’s directives.

The United States isn’t alone in expressing these security apprehensions. Recently, the Indian government prohibited dozens of applications created by Chinese developers, including various social media platforms and utility tools like calendar and flashlight applications amid deteriorating relations with China. PUBG Mobile, among the world’s most popular mobile games and developed by Tencent, also appeared on India’s banned applications list.

The fundamental distinction between platforms like WeChat or PUBG Mobile and games produced by Riot Games and Epic Games lies in their development origins. Titles such as League of Legends and Fortnite are created by American corporations rather than Tencent directly. This development origin difference likely provides some protection against the comprehensive restrictions imposed on TikTok and WeChat.

However, should diplomatic friction between the Trump administration and China intensify further, predicting future regulatory outcomes becomes increasingly challenging. The gaming industry faces potential disruption from geopolitical tensions that extend far beyond typical market considerations.

For players concerned about potential service disruptions, understanding the corporate structures behind your favorite games becomes increasingly important. While immediate impacts seem limited, the precedent set by CFIUS actions against other Chinese-connected platforms suggests continued scrutiny of gaming investments remains probable.

The situation highlights how global political dynamics increasingly influence digital entertainment ecosystems. Companies with significant foreign ownership, particularly from nations with competing strategic interests, may face heightened examination regardless of their specific business operations or content.

No reproduction without permission：Game Guides Online » US government probes Riot, Epic Games over Tencent ownership Understanding US government investigations into Tencent's gaming investments and potential industry impacts