Regulators Push Back Tencent-Led Merger

Tencent faced its first major pushback as Beijing has been swinging its anti-competitive axe to rein in big tech companies.

On 10 July 2021, China’s State Administration for Market Regulation (SAMR) officially rejected the proposed merger of HUYA Inc and DouYu International Holdings, two video game live streaming platforms backed by the Chinese internet titan.

The deal, which would’ve resulted in Tencent controlling 67.5% of the merged entity, was rejected as it would’ve strengthened Tencent’s dominance in the space.

Since December 2020, SAMR has issued 44 penalties on anti-competitive behaviour including the record USD 2.75 billion fine for e-commerce giant Alibaba in April 2021.

The market has been waiting for the axe to fall on Tencent given its perceived wide-ranging reach and insight into every facet of Chinese life. It is the operator of widely used messaging app WeChat, payment system WeChat Pay, popular online game Honor of Kings, music streaming service Tencent Music, and countless other offerings in China.   

Tencent’s stock has fallen around 30% YTD and closed at HKD 538.50 each before the SAMR announcement.