Following a US antitrust investigation, two directors of Epic Games, the North Carolina-based developer behind Fortnite, have resigned from their positions. These directors were originally appointed by Tencent Holdings, a Chinese technology firm that owns a minority stake in Epic Games.
The US Department of Justice expressed concerns that the dual roles of two directors on the boards of both Epic Games and Tencent Holdings may have breached the Clayton Act. The issue arises from Tencent’s ownership of Riot Games, a Los Angeles-based video game developer and esports organizer.
The Justice Department highlighted that Section 8 of the Clayton Act has a specific provision that “prohibits directors and officers from serving simultaneously on the boards of competitors, subject to limited exceptions.”
Deputy Director of Civil Enforcement Miriam R Vishio emphasized the Antitrust Division’s ongoing focus on addressing interlocking directorates, stating “Scrutiny around interlocking directorates continues to be an enforcement priority for the Antitrust Division.”
According to Al Jazeera, Tencent reaffirmed its commitment to the partnership in a statement, saying “Our relationship with Epic has always centred on making great games and delivering great experiences for players and developers. We look forward to continuing to work with them on this shared vision.”
Epic Games is also renowned for developing the Unreal Engine, a pioneering 3D video game engine. Although Epic Games is a private entity, Tencent has a minority stake in the company, which is part of its broader portfolio of equity investments in various video game and media companies, as noted by the Justice Department.
Notably, the Justice Department’s statement did not raise any national security concerns regarding Tencent or its Chinese ownership, marking a departure from the US government’s stance on other Chinese tech companies, such as ByteDance, the owner of TikTok, which is facing a potential ban in the US unless sold by January 19.
As a result of the investigation, Tencent has agreed to make changes to its agreement with Epic Games, specifically opting to “amend its shareholder agreement with Epic to relinquish its unilateral right to appoint directors or observers to the Epic board in the future,” the Justice Department revealed.
The investigation has concluded with the resignation of two unnamed directors, but a crucial point remains that “no company or individual has admitted to liability in connection with this investigation”, as highlighted in the statement.
Epic Games’ investor list includes several prominent names, such as Sony, Disney, Fidelity, and BlackRock.
Tencent, a global multimedia giant, boasts an impressive presence worldwide. Incorporated and domiciled in the Cayman Islands, the company’s operational hub is situated in Shenzhen, China.
Tencent is facing hurdles in its pursuit of a potential buyout of Ubisoft, the renowned French video game publisher behind iconic franchises like Assassin’s Creed and Prince of Persia.
Back in May, the Finnish video game developer Remedy Entertainment canceled its joint venture game project named ‘Codename Kestrel’ with Tencent. However, the reason behind the cancellation was not disclosed. Remedy Entertainment, the studio behind acclaimed video game franchises such as Max Payne, Control, Alan Wake, and Quantum Break, has established itself as a powerhouse in the gaming industry.
