In Depth: China Applies Closer Scrutiny to Sprawling Tech Acquisitions

As Chinese regulators ramp up their fight against unfair competition, the rapid expansion of tech giants through mergers and acquisitions is coming under stricter scrutiny. The toughening regulatory posture against anticompetitive practices may throw into question the proposed multibillion dollar acquisition of game-streaming site DouYu International Holdings Ltd. by rival Huya Inc. The combination could create a Chinese game livestreaming leader akin to Amazon.com Inc.’s Twitch Interactive Inc. The State Administration for Market Regulation (SAMR), the country’s antitrust watchdog, said last month it is reviewing the deal, which was engineered by China’s game and social media giant Tencent Holdings. The merger of Huya and Douyu, both backed by Tencent, would give Tencent a 67.5% stake in the new company, according to an agreement announced in October. This would further consolidate Tencent’s dominant status in China’s 30 billion yuan ($4.6 billion) gaming market, the world’s biggest. Tencent built up its command of the Chinese gaming industry through massive acquisitions of small rivals. Backed by its popular messaging apps WeChat and QQ, the company controls a large share of game distribution in the country. “Sixty percent of Chinese people are playing games that Tencent wants them to play,” a game industry source…
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