The plans for the eCommerce giant to merge the videogame sites first began last year as a tie-up that would allow for the streamlining of Tencent’s stakes in the firms. Users in China routinely go to DouYu and Huya in order to do things like watch eSports tournaments and follow professional gamers.
The firms are estimated to represent around 80 percent of the market and come with a $3 billion market value, which is still growing.
China’s State Administration of Market Regulation (SAMR) announced recently that it would block the merger because the SAMR found that the combined market share between DouYu and Huya came out to more than 70 percent. What’s more, the SAMR found that this would only boost Tencent’s dominance. Tencent, the report says, is already in possession of more than 40 percent of the market for online games.
The deal, according to Zhang Chenying, a member of the state council’s anti-trust committee, would be bad for competition because it would put the DouYu and Huya entities under Tencent’s “complete control.”
The deal termination comes as something of a sign of how far China is willing to go in terms of cracking down on tech companies.
Earlier in 2021, the government there made the choice to fine eCommerce giant Alibaba $2.75 billion — a record — for its reported anticompetitive behaviors.
China’s status as a market is desirable for its great breadth of hundreds of millions of consumers, along with its middle-class segment and attendant discretionary income.
That said, it has abundant privacy issues and regulations to contend with. There’s also plenty of scrutiny on everyday business. The country has said it’s planning to add more oversight on firms going public or intending to do so.