In the world of video games, Tencent is one of the major players in part because it owns Riot Games–the company behind League of Legends–as well as stakes in other companies, including Epic Games. However, the company is now facing serious problems over its alleged ties with the Chinese military.
According to Bloomberg, Tencent is one of several companies that have been blacklisted by the US Defense Department after the government declared them to be Chinese military-affiliated. Tencent and the other companies on the list have the right to appeal that classification, because the ramifications are enormous if that stands. Companies tied to the Chinese military may be removed or delisted from US stock exchanges and other markets around the world.
In after-hours trading, Tencent felt the first ramifications of this news when its shares fell 7.3% to $49.31. If Tencent fails to appeal and it is delisted, the company could lose a great deal of money and it’s unclear how that would affect Riot Games. Tencent recently attracted the US government’s attention over two members it named to Epic’s board of directors. The Justice Department noted that the Clayton Act is meant to prevent board members from one company serving on a rival company’s board as well. Consequently, Riot Games’ Ben Feder and David Wallerstein resigned from Epic’s board, and Tencent relinquished its right to name any additional members to Epic.
Tencent also owns a 16% stake in Elden Ring developer From Software, and it is reportedly developing a mobile version of that title. Additionally, Tencent is a minor owner of Assassin’s Creed publisher Ubisoft, and recent reports indicate that the former is interested in increasing its stake in the latter. Thus far, Ubisoft and Tencent have not reached a deal about the future of the publisher.