Senior officials in the United States government are debating whether Chinese technology conglomerate Tencent should be permitted to retain its stakes in major video game developers as President Donald Trump prepares for a planned visit to China in April.
The internal discussions have centered on whether Tencent’s investments in gaming companies based in the United States and Finland could create national security risks, according to The Financial Times. Several officials familiar with the deliberations said the matter has been reviewed at high levels within the administration, although a scheduled cabinet-level meeting on Tuesday to discuss the issue was postponed due to scheduling conflicts, according to The Financial Times.
Tencent has built a dominant position in the global gaming industry through investments and acquisitions. The company holds a 28 percent stake in Epic Games, the North Carolina-based studio behind the popular online game Fortnite. It also fully owns Riot Games, the Los Angeles developer responsible for League of Legends, and Supercell, a Finnish mobile gaming company known for titles such as Clash of Clans, according to The Financial Times.
These investments have drawn attention from the Committee on Foreign Investment in the United States (Cfius), a Treasury-led body that reviews foreign investments for potential national security implications. According to The Financial Times, Tencent’s gaming portfolio has become one of the longest-running cases under Cfius scrutiny.
Concerns about Tencent’s role in the gaming industry date back to Trump’s first administration, when Cfius began examining whether the company’s ownership stakes in Epic Games and Riot Games could give it access to personal data belonging to millions of American users, according to The Financial Times. The panel also reviewed Tencent’s purchase of Supercell despite the company being based in Finland because of its substantial number of US users.
One person familiar with earlier discussions said Tencent had been negotiating potential safeguards with Cfius last summer aimed at addressing Washington’s security concerns, according to The Financial Times.
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The current debate comes just weeks before Trump is expected to travel to China to meet President Xi Jinping. Beijing has repeatedly criticized Washington’s use of national security reviews that affect Chinese companies operating internationally, according to The Financial Times.
Security officials have highlighted the vast amounts of user information collected through online gaming platforms. “These platforms could serve as a significant intelligence collection source,” said Chris McGuire, a former official in President Joe Biden’s administration who worked on technology and security policy.
During the Biden administration, Cfius spent years examining Tencent’s gaming holdings. According to The Financial Times, Lisa Monaco, who served as deputy attorney-general at the time, supported forcing Tencent to sell its stakes in the gaming companies. The Treasury Department, however, favored a compromise that would allow Tencent to keep the investments while implementing strict safeguards for user data.
“Clearly the biggest national security issue in the area of gaming is data privacy and security,” said Peter Harrell, a visiting scholar at Georgetown University who previously worked on national security issues in the White House.
Despite lengthy discussions, the Biden administration ultimately did not reach a final decision. Former officials told The Financial Times that agencies represented on the Cfius panel could not reach agreement on whether mitigation measures would sufficiently address the risks.
In the final month of Biden’s presidency, the Pentagon added Tencent to a list of companies it claimed had links to the Chinese military. Tencent has denied any such connections, according to The Financial Times.
Within the ongoing policy debate, some officials believe potential risks could be managed through strict oversight and data protection requirements. Others argue that the sheer volume of personal data collected through gaming platforms — including financial details, user profiles and in-game communications — makes the investments too sensitive.
Chris McGuire, who now works at the Council on Foreign Relations, warned about the broader implications of allowing the investments to stand. “Approving this deal, even with mitigation agreements, could send a broader signal that investment from ‘Chinese military companies’ does not carry national security risks, which is certainly not the case,” he said.
The scrutiny of Tencent is unfolding amid broader tensions over Chinese corporations. According to The Financial Times, the Pentagon recently added Chinese companies including Alibaba and electric vehicle manufacturer BYD to its blacklist.
Source: The Financial Times
