Tencent Holdings Ltd. removed two directors it appointed to Epic Games Inc.’s board after the US Justice Department ruled the appointments violated antitrust laws.
Tencent, China’s most valuable company, holds a minority stake in Epic Games and owns a direct competitor through its Riot Games Inc. subsidiary, prompting antitrust concerns, according to the DOJ on Wednesday.
The company has given up its board seats and its right to unilaterally appoint directors or observers, the statement said.
Epic Games announced in an email that David Wallerstein and Ben Feder are stepping down as directors. Wallerstein, a longtime Tencent executive, transitioned to an advisory role earlier this year, while Feder is managing partner at Tirta Ventures.
Epic Games is a major player in the gaming industry, known for developing the Unreal Engine, widely used for advanced 3D graphics and in-game physics.
The company also created Fortnite, Rocket League, and other popular games, and operates the Epic Games Store, a competitor to Valve’s Steam.
Tencent and Sony Group Corp. have both made significant investments in Epic, which relies on their technology.
DOJ announced that it has increased enforcement and oversight of potential violations of Section 8 of the Clayton Act, which prohibits directors from serving on the boards of competing companies, such as Epic Games and Riot Games.
“Scrutiny around interlocking directorates continues to be an enforcement priority for the Antitrust Division,” Deputy Director of Civil Enforcement Miriam Vishio said in the DOJ’s statement. “Our increased enforcement around Section 8 over the last few years has achieved substantial results.”
Tencent is one of the world’s most aggressive game investors, having acquired stakes in studios behind hits such as Clash Royale, Elden Ring, and Path of Exile.
