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Chinese antitrust regulator blocks Tencent’s video game deal worth $5.3B

Tencent

Market dominance is becoming a major concern for government authorities because it is killing potential small businesses and kicking out the ones that are trying to grow. Amazon, Apple, Alphabet’s Google, etc. are all examples of market dominants that ruthlessly crush small companies coming their way or simply acquire them to gain more market share. The government authorities are aware of the situation and all of these companies are undergoing one or the other anti-trust trial. Market dominance has become an actively complex issue that the government is trying to fix by blocking deals and conducting major scrutiny.

Having said that, China is no different than the United States when it comes to business and market dominance. Recently, China’s market regulators have reportedly blocked Tencent’s deal on Saturday that involved its plan to merge the top two videogame streaming platforms- Huya and DouYu. According to sources, the deal has been blocked on antitrust grounds that would make Tencent a leader in China’s video game industry.

It is not unknown that the videogame industry is growing rapidly all around the globe and China is no exception. Tencent wants to own all of China’s budding video-game market share by making this deal but the Chinese market regulator does not want that to happen. According to data firm MobTech, post success of Tencent’s merger deal, the Chinese company would end up with almost 80% of the market which is reportedly worth USD 3 billion and growing rapidly, according to a report by Reuters.

Huya is ranked the number 1 videogame streaming website, followed by DouYu in the second position with Tencent being a major part of both these companies. Tencent holds over a third of DouYu’s market share and 36.9 percent of Huya’s market share. Combining the two would give Tencent a market value of USD 5.3 billion.

According to Reuters, the State Administration of Market Regulation plans to block the $5.3 billion deal as it would give the company over 70% market share post-merger. This deal would strengthen Tencent’s dominance in the market which is already 40 percent in the online-games operation segment.

Tencent, being one of China’s biggest technology companies, said that it would comply with all regulatory requirements and abide by the authority’s decisions. The company further assured that it would fulfill all of its social responsibilities as well. However, the raging anti-competitive behavior in China is targeting market monopolies and the Chinese government is taking strict actions to maintain full market compliance.

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