Chinese regulator stops Huya-Douyu merger game streaming

HONG KONG — China’s market regulator on Saturday blocked the merger of Tencent-backed game streaming platforms Douyu and Huya after an anti-monopoly investigation, as authorities tighten controls on some of the country’s largest tech companies.

Huya and Douyu, who offer video game live streaming services similar to Twitch in the US, are two of the largest companies of their kind in China. Both count gaming company Tencent among their investors.

China’s State Administration for Market Regulation said in a statement that a merger between Huya and Douyu would give Tencent control of the merged entity.

From the perspective of several key indicators such as revenue, number of active users, resources for streamers, the total share is very substantial and the elimination and restriction of competition can be foreseen, the statement said.

Authorities have stepped up surveillance of some of China’s largest tech companies over concerns about monopolistic behavior and uncontrolled growth, as well as how companies collect and use data from their millions of users.

China’s cyber regulator also said on Saturday that companies that have personal information of more than a million users must apply for cybersecurity approval if they plan to advertise abroad. China’s Cyberspace Administration said in a statement that the review and approval is necessary because of the risk that the data could be compromised, monitored and maliciously misused by foreign governments.”

It also said there is a risk of key data being used illegally or transferred abroad.

Last week, the cyberregulator ordered a cybersecurity investigation into the ride-sharing platform Didi Global Inc. Food delivery platform Meituan is also under an anti-monopoly investigation, and e-commerce giant Alibaba was fined a record $2.8 billion earlier this year for violations of antitrust laws.

The Chinese market regulator said the decision to ban the merger between Huya and Douyu is the first example of regulators banning market concentration in the internet sector.

The two companies first announced last October that they planned to merge, but market regulators later said they would review the $6 billion deal.

Tencent said it had been notified by the regulator that the merger has been terminated.

The company will abide by the decision, comply with all legal requirements, act in accordance with applicable laws and regulations and fulfill our social responsibilities, the company said in a statement on Saturday.

Earlier this week, Chinese authorities said they would also strengthen surveillance of foreign listed companies.

The new measures will improve the regulation of data security and cross-border data flows, as well as the management of confidential data.

The authorities also plan to address illegal activities in the securities market and investigate and punish acts such as the fraudulent issuance of securities, market manipulation and insider trading.