US Government Mulls Over Blocking Tencent’s Investments in American Gaming Companies

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According to a Financial Times report, the U.S. government is assessing potential measures against Tencent’s investments in American gaming companies due to national security concerns. Tencent was added to the Department of Defense’s list of Chinese Military Companies in January 2025, though this designation currently carries no sanctions or legal repercussions. Tencent maintains that its business operations remain unaffected. Tencent is currently engaged in discussions with the Committee on Foreign Investment in the United States (CFIUS) to address concerns regarding its investments in American gaming firms. These discussions follow Tencent’s designation as a Chinese military company by the Department of Defense last January. Authorities from the Department of Justice and Treasury Department have held internal meetings to evaluate whether Tencent should be allowed to maintain significant stakes in U.S.-based studios, given the potential access to data from millions of American gamers. A cabinet-level meeting on this issue was postponed due to scheduling conflicts, but a decision is expected before the scheduled April meeting between U.S. President Donald Trump and Chinese President Xi Jinping, adding a diplomatic dimension to the case.

The review of Tencent’s investments began during President Trump’s first term, becoming one of the longest probes conducted by CFIUS. As a result, the U.S. government could require Tencent to divest its stakes in Riot Games and Epic Games due to national security concerns. Disagreements reportedly emerged among agencies during President Biden’s administration regarding the appropriate course of action. The Department of Justice advocated for stricter measures, including divestment, while the Treasury Department favored allowing Tencent to retain its stakes, provided that mitigation measures, such as data segregation, were implemented. Tencent fully owns Riot Games, granting it access to player data from games like League of Legends and Valorant. Additionally, Tencent holds a 28% minority stake in Epic Games, fully diluted. Concerns also exist regarding Tencent’s potential access to the personal data of U.S. citizens through games developed by non-U.S. studios in which Tencent has a stake, such as Supercell, the developer of Clash of Clans.

One possible solution being considered references the restructuring of TikTok’s U.S. operations. This involved creating TikTok USDS Joint Venture LLC, responsible for data protection, algorithm security, content moderation, and software assurance in the U.S. A similar arrangement could be considered for assets linked to Tencent. The U.S. gaming industry’s primary concern is Tencent’s extensive reach. The company’s full ownership of Riot Games gives it access to vast amounts of American player data through popular titles like League of Legends and Valorant. Tencent also controls Turtle Rock Studios, the creators of Back 4 Blood, and holds approximately a 35% minority stake in Epic Games, the owner of Fortnite. Authorities are also concerned about potential indirect access to U.S. citizen data through games produced by foreign studios in which Tencent has a stake, such as the Finnish company Supercell, the developer of Clash of Clans.

Tencent’s Potential Divestiture of Riot Games Amid US-China Negotiations and Gaming Industry Regulation

Given Tencent’s full ownership and the global reach of its competitive games, Riot Games is likely to be the primary focus of any potential divestiture. Tencent’s minority stake in Epic Games might avoid stricter measures, while Turtle Rock is considered less strategically important in the geopolitical context. However, analysts suggest this issue could become a bargaining chip in upcoming bilateral negotiations, making the outcome uncertain, especially as the lack of consensus among agencies leaves the case unresolved.

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