China’s Top Market Regulator Bans Merger of Tencent’s Video Game Streamers Huya, DouYu

(Source: VCG)

China’s market regulator on Saturday blocked tech giant Tencent’s merger of Huya and Douyu, two videogame streaming platforms.

“We will conscientiously abide by the decision, actively comply with all regulatory requirements, operate in compliance with laws and regulations, and earnestly fulfill our social responsibilities.” Tencent said in a statement.

According to Xinhua News Agency, on January 4 this year, the State Administration of Market Supervision has conducted an anti-monopoly review on the merger case.

With 36.9% ownership of the company’s shares, Tencent is Huya’s largest shareholder and owns more than one-third of Douyu’s shares. Both platforms have been listed in the United States, with a total market value of $6 billion.

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The market regulator’s review indicates that Tencent has a market share of more than 40% in upstream online gaming operation services, ranking first in the sector. Huya and Douyu enjoy a market share of more than 40% and 30% respectively in the downstream live gaming broadcast market, ranking first and second.

The merger would strengthen Tencent’s dominance in this market, which, regulators say, is not conducive to fair competition and the interests of consumers.

The Chinese government’s anti-monopoly investigation is in full swing. Tencent’s case comes after Alibaba paid a record $2.75 billion in fines for anti-competitive practices and Meituan faced an antitrust investigation for banning Alipay on its app.