Chinese regulator blocks Tencent-backed Huya-Douyu game-streaming merger

Beijing has launched a major crackdown on the biggest players in tech

BEIJING: China’s financial regulator has blocked a merger of the nation’s two largest video game live-streaming sites planned by tech giant Tencent over antitrust concerns, as authorities ramp up scrutiny of some of the country’s biggest technology companies.

Huya and Douyu which provide videogame live-streaming services akin to Twitch in the U.S. are two of the largest companies of their kind in China. Both count gaming firm Tencent among their investors.

Beijing has launched a major crackdown on the biggest players in its tech sector after years of runaway growth and lax regulation, partly due to fears over their growing influence and the security of troves of sensitive consumer data.

China’s State Administration for Market Regulation said in a statement that a merger between Huya and Douyu would give Tencent control over the merged entity.

“From the perspective of different key indicators like revenue, number of active users, resources for streamers, the total share is very substantial and the elimination and restriction of competition can be foreseen”, the statement said.

“This has the effect of eliminating or restricting competition, is not conducive to fair market competition and is not conducive to the healthy and sustainable development of the online gaming and video game livestreaming market,” it added.

The blocked merger comes shortly after regulators abruptly announced a cybersecurity review into ride-hailing app Didi Chuxing on the heels of a US IPO that raised $4.4 billion.

Plans for the deal were initially announced by Tencent last October, but SAMR said it would undertake an antitrust review into the merger in December. The same month, it announced an antitrust investigation into e-commerce giant Alibaba, whose fintech arm Ant Financial’s bumper IPO was shelved at the last minute by regulators in November.

The company was later slapped with a record 18.2 billion yuan ($2.78 billion) fine for anti-competitive practices.

Tencent currently has a majority stake in Huya and a 38 percent stake in Douyu, and the merger was set to grant it majority control over the combined entity. Both Huya and Douyu are listed in the US, with market caps of $3.57 billion and $1.77 billion respectively.