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Tencent-backed DouYu still wants to merge with Huya despite government antitrust concerns

  • DouYu and Huya, ranked No 1 and 2 as China’s top video-streaming sites for gamers, hold nearly 90 per cent of the market
  • Chinese market regulators have previously expressed concerns over the potential merger

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A Tencent booth at the 2020 China International Fair for Trade in Services (CIFTIS) in Beijing, China, on September 4, 2020. Photo: Reuters
Josh Ye

DouYu and Huya, China’s top game video-streaming sites backed by internet giant Tencent Holdings, said they are still on track to merge just three months after the country’s antitrust watchdog flagged concerns about the deal.

First revealed last October, the planned tie-up of New York-listed Huya and Nasdaq-listed DouYu under Tencent’s live-streaming unit Penguin Esports would merge more than 300 million users, bringing the platforms’ combined market share to nearly 90 per cent in the country, according to data from Shanghai-based consultancy iResearch.

Whether Tencent can push through the deal under the watchful eyes of Beijing is seen as a barometer of how far Chinese antitrust authorities will go to rein in the Shenzhen-based tech company and its Big Tech peers. Tencent may have to offer “concessions” to the government to get the green light for the merger, according to a Reuters report on Tuesday, although it was unclear what authorities were demanding. Reuters also reported on Wednesday that Pony Ma, the billionaire founder and CEO of Tencent, met with senior antitrust officials earlier this month to discuss compliance, but it is unknown whether the DouYu-Huya deal was mentioned in those talks.

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During DouYu’s third-quarter earnings call on Monday, company CEO and founder Chen Shaojie said “the merger is still ongoing”, adding that he cannot “really tell the timing for the deal”. 

“We are looking forward to our next steps, including getting approval from the [US Securities and Exchange Commission (SEC)] and from the relevant domestic regulators,” Chen said. “After the merger, we expect more in-depth commercial cooperation between the two platforms, as well as with Tencent, which we believe will further enhance the positioning of the combined entity.”

Catherine Liu, chief financial officer of Huya, also confirmed that the merger remains ongoing in Huya’s third-quarter earnings call on the same day. 

“After we announced our potential merger with DouYu in October last year, we have made relevant filings with the SEC. And in China, we have voluntarily submitted the Declaration of Concentration of Undertakings with the State Administration for Market Regulation, the relevant regulatory authority. And currently, the review is still in process,” Liu said. 

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