Two directors of Epic Games, the developer behind the popular game Fortnite, have resigned from their positions following an antitrust investigation by the United States Department of Justice (DOJ). Both directors were appointed by Tencent Holdings, the Chinese tech giant that holds a minority stake in the North Carolina-based company.
The DOJ announced on Wednesday that it had raised concerns over potential violations of the Clayton Act, which prohibits directors and officers from serving simultaneously on the boards of competing companies. Tencent, in addition to its investment in Epic Games, owns Riot Games, a Los Angeles-based video game developer and e-sports organizer. This interlocking directorate, according to the DOJ, was deemed problematic under Section 8 of the Clayton Act, which aims to prevent conflicts of interest in corporate governance.
“Scrutiny around interlocking directorates continues to be an enforcement priority for the Antitrust Division,” said Miriam R. Vishio, Deputy Director of Civil Enforcement at the DOJ’s Antitrust Division. The Justice Department’s statement confirmed that Tencent and Epic Games cooperated with the investigation, and although the directors have stepped down, no company or individual has admitted to liability in connection with the matter.
In response, Tencent issued a statement emphasizing its commitment to its partnership with Epic Games. “Our relationship with Epic has always centered on making great games and delivering great experiences for players and developers. We look forward to continuing to work with them on this shared vision,” Tencent said. Furthermore, Tencent has agreed to amend its shareholder agreement with Epic, relinquishing its unilateral right to appoint directors or observers to Epic’s board in the future, the DOJ noted.
Epic Games, also known for its Unreal Engine, a groundbreaking 3D game development tool, is privately held and has an array of investors, including Sony, Disney, Fidelity, and BlackRock. Tencent, one of the largest multimedia companies globally, is headquartered in Shenzhen, China, but is incorporated in the Cayman Islands. The DOJ’s statement did not cite national security concerns regarding Tencent’s Chinese ownership, a stark contrast to the scrutiny faced by other Chinese tech companies like ByteDance, the parent company of TikTok. TikTok is set to be banned in the US from January 19 unless ByteDance sells the platform.
Despite the resignations, the Justice Department clarified that the investigation has not led to any admissions of wrongdoing, and the case underscores the government’s heightened focus on antitrust enforcement in the tech sector.
