China’s antitrust watchdog has blocked the merger of video game live-streaming platforms Huya and Douyu, both backed by Tencent, South China Morning Post reports. According to the State Administration for Market Regulation (SAMR), the proposed deal would increase the dominant position of Tencent, which holds majority stakes in both companies, considering it already controls 40 percent of online game operations. The merger “may have the effect of excluding or restricting competition, which is not conducive to fair competition and may damage the interests of consumers”, the SAMR said.
Huya and Douyu initially announced plans to merge in October 2020. The merger would have created a USD 5.3 billion giant with 300 million monthly active mobile users. As the two biggest players in the sector, Huya and Douyu already account for 40 percent and 30 percent of sales, respectively, and 45 percent and 35 percent of active users, according to SAMR.
Tencent held a 43 percent share of China’s video gaming market in 2020, according to market research firm Niko Partners. Tencent owns a 37 percent stake in Huya and 38 percent of Douyu, and would have owned about 67 percent of the merged entity.
SAMR said it opened an antitrust review into the proposed merger in January, and has invited comments from relevant government agencies, experts and competitors in the industry. The agency worked with Tencent throughout the review, and although the company submitted a revised merger proposal, it failed to mitigate the negative impact on market competition, SAMR said.
Tencent has announced plans to “abide by the decision, comply with all regulatory requirements, operate in accordance with applicable laws and regulations, and fulfil our social responsibilities”. Douyu also reports it “fully respects the regulatory decision” and will cooperate with regulatory requirements.
