Tencent’s $1.27 billion Sumo Group acquisition directs U.S. regulations

The U.S. national security panel has launched an examination into Tencent’s acquisition of UK-based gaming company Sumo Group, exposing the Chinese giant to ferocious scrutiny.

Earlier in July, Tencent Holdings’ $1.27 billion acquisition of Sumo Group granted the conglomerate an 8.75 percent stake in the British company.

Sumo is deemed a prominent video gaming maker amongst its industry and community, as it carried out contracts with some of the most prestigious titles in the field. Mostly known for creating PlayStation 5’s “Sackboy: A Big Adventure,” in addition to being the original studio behind Xbox and PC’s “Crackdown 3.”

At the time of acquisition, Tencent’s takeover of the British gaming firm was finalized through its subsidiary, Sixjoy Hong Kong Limited.

Now, a U.S. security panel initiated an investigation into the motives backing up the acquisition.

“Tencent had agreed to offer undertakings to gain approval from the Committee on Foreign Investment in the United States (CFIUS), which assesses deals to ensure they do not hurt national security,” according to Reuters. 

It seems that Tencent’s conduct is not the only investigation the Committee is indulging in, as a report by Reuters also clarified that the panel is heightening its regulatory grip on a bundle of Chinese deals. With tensions running high between Beijing and Washington, the Committee is subsequently launching an examination into the U.S. sale of TikTok.

In reference to the spokespeople close to the matter, both companies are working hand-in-hand with the CFUIS to clarify all aspects of the acquisition to demonstrate complete cooperation with U.S. authorities.

From its stance, Tencent had shown in August signs of regulatory expectations, following its 29 percent rise in its second quarter (Q2) profit, while indicating full compliance intentions with the execution of a more condensed structural regulatory wave.

Tencent chief, Lau Chi Ping Martin, announced that internet watchdogs are directing their attention towards remedying the industry’s misconducts, all while accentuating the vitality of holding social responsibility for their actions.

At the end of the day, the regulatory overtake on the tech industry, be it Chinese or American, will continue to manifest itself into a much more influential force to optimize regulatory role in affiliation to anti-trust and data privacy misconduct.