Tencent Restructures Tale Games’ Leadership in Wake of Justice Department Investigation

Two directors from Tencent have stepped down from the board of directors at Epic Games, as reported by the U.S. Justice Department. In a statement, the department indicated that these departures were due to concerns regarding their roles on the board being anti-competitive and in breach of Section 8 of the Clayton Act.

Additionally, Tencent has revised its shareholder agreement with Epic and has “given up its unilateral authority to appoint directors or observers to the Epic board in the future.”

As detailed in the statement, Section 8 prohibits directors and officers from “serving concurrently on the boards of competing companies.” Tencent has held a minority stake in Epic since 2012 and is the parent company of League of Legends developer Riot Games. Both studios are crucial players in the industry, and Tencent’s investments in each have previously drawn attention from the U.S. Committee on Foreign Investment.

The Department’s investigation into Tencent and Epic’s relationship “is part of the department’s ongoing enforcement of Section 8, which has so far unwound or blocked interlocks involving at least two dozen firms.”

“The examination of interlocking directorates remains a key enforcement focus for the Antitrust Division,” stated Antitrust Division Deputy Director Miriam Vishio. “Thanks to the hard work of our exceptional team, our increased enforcement of Section 8 in recent years has produced significant outcomes and is now part of our core operations.”

Epic Games, legendary legal disputes

Recently, Epic Games has been under scrutiny from the U.S. government. Earlier this month, the FTC began issuing refunds to Fortnite players who were misled into making unintended purchases between 2017 and 2018.

The entire situation began back in December 2022. At that time, the FTC and Epic reached a $520 million settlement after Epic was accused of employing various “design tactics” to “trick millions of players into making unintended purchases.”

Moreover, Epic was instructed to return $245 million of that settlement to consumers, and the FTC began the refund process in September 2023. The total refunds are reported to exceed $72 million.

The Fortnite developer has also proactively utilized the legal system to address its disputes, particularly with Apple. Its legal battle against the tech giant resulted in a court decision allowing Apple to maintain certain restrictions for third-party payments on its App Store. Last year, Apple successfully contended before the Ninth Circuit that it had not engaged in anti-competitive conduct against Epic.

Months later, Epic appealed that recent ruling to the Supreme Court, which ultimately dismissed both companies’ appeals in January.

This situation has previously highlighted that the Justice Department’s concerns regarding Epic and Tencent were not indicative of a full-blown investigation, and Epic’s $245 million penalty was already integrated into its initial FTC settlement.

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