The Merger Between Huya And Douyu Blocked By Anti-Monopoly Regulations In China, Tencent Suffers A $5.3 Billion Potential Loss
Tencent Holdings Ltd is famously known for providing Internet-related services and products, including entertainment, artificial intelligence, and other technology. This multi-million dollar company had a plan to merge the country’s two most prominent video game streaming websites, Huya and DouYu. This plan was blocked by China’s market regulatory bodies on Saturday.
Tencent wanted to increase its own profits and thus planned to merge these two video streaming websites together. Tencent holds more than 80% shares of both companies which is more than $3 billion and it keeps rising every day and thus wants to merge.
Tencent holds 36.9% shares of Huya and is the largest shareholder of the company whereas it holds more than half the shares of DouYu. Both these websites are listed in the USA share market and their total market worth combined is approximately $5.3 billion.
The plan was first reported by Reuters, an international news organization and is the largest news agency in the world. Reuters reported it to the State Administration of Market Regulations, SAMR, to close the plan completely on Monday. The regulatory bodies went through the whole plan and analyzed the allowances proposed by Tencent in the plan and later they refused to incorporate the plan.
The reason they gave for taking down the pan is very simple. They didn’t want Tencent to acquire a larger share in the market and become so financially powerful that it could manipulate the market. SAMR explained that both Huya and DouYu were video streaming giants having more than 70% market share, out of which half their shares, that is 40% shares, were owned by Tencent alone. If both the companies combined then Tencent would have the largest share in the video streaming industry thus making Tencent very powerful.
Huya is the largest video streaming platform in China and also globally it operates under the name Nimo TV. It was released in 2011 and its share price is 15.13 USD. DouYu is the second-largest video streaming platform in China and it was launched in the year 2014. Its share price is 5.45 USD. Both these platforms invite people to stream video games online and users can watch e-sports tournaments and you can play with other skilled players on the website.
Tencent took the disagreement of the regulatory bodies positively and did assure that it would take care of all the rules and regulations and abide by the decision taken by the market regulators and function according to legal terms and also look after its social responsibilities and not take an action that can harm other individuals.
This deal was canceled in between the ongoing debate of a Chinese language tech company in the federal government. The anti-monopoly regulator works on regulating the market to keep the competition fair and protect the customers from predatory business practices. This law is also known as antitrust law in the USA.
The antitrust regulators stopped the deal between Huya and DouYu as it would not be beneficial for other companies and thus prevent fair competition in the market.
