Regulatory look at Fortnite and League of Legend makers could unravel Tencent’s gaming empire, analysts say

Trouble for Tencent Holdings is only just beginning in the gaming industry, experts say. Bloomberg reported on Thursday that the Committee on Foreign Investment in the United States (CFIUS) is investigating Tencent-owned video game companies, but despite these headwinds, the case may not be as strong as the one recently made against TikTok.

CFIUS has sent letters to Epic Games, Riot Games and other Tencent-affiliated gaming companies inquiring about their security protocols for handling user data, according to Bloomberg.

As the world’s largest gaming company, Tencent owns stakes in a number of gaming firms around the world. Riot, the developer of League of Legends, is a wholly owned subsidiary and Tencent has a 40 per cent stake in Epic, the maker of Fortnite and the Unreal Engine. Both companies are based in the US.

This latest inquiry builds on the White House’s increased scrutiny of Chinese tech firms and their ties to US companies, which has been a source of tension between Washington and Beijing and a pillar of President Donald Trump’s re-election campaign. However, experts doubt the inquiry as it exists now will lead to any immediate changes, saying the case against Tencent as a national security threat remains tenuous.

This is in contrast to recent attacks made against the hit short video app TikTok, from Beijing-based ByteDance, which collects personal information on the millions of users who have the app installed on their phones in the US. Trump has also threatened Tencent‘s WeChat with a ban although specific measures are still being examined by the Commerce Department.

A particular point of concern with TikTok was the collection of geolocation data, which isn’t an issue with most Epic and Riot games. Their games are mostly played on PC, which generally does not enable geolocation tracking.