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HONG KONG, BEIJING (Reuters) – China’s market regulator on Saturday blocked the merger of game streaming platforms backed by Tencent Douyu and Huya following an anti-monopoly investigation, as authorities step up scrutiny of some of the biggest tech companies in the country.
Huya and Douyu – which provide video game live streaming services similar to Twitch in the United States – are two of the largest companies of their kind in China. Both count game 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 point of view of different key indicators such as revenue, number of active users, resources for streamers, the total share is very large and the elimination and restriction of competition can be foreseen,” said the communicated.
Authorities have stepped up oversight of some of China’s biggest tech companies over concerns about monopoly behavior and runaway growth, as well as how companies collect and use data from their millions of users.
Also on Saturday, the Chinese cyber regulator released draft measures that require companies with personal information of more than one million users to apply for cybersecurity approval if they plan to register overseas. China’s Cyberspace Administration said in a statement that review and approval is necessary because of the risk that data could be “maliciously affected, controlled and exploited by foreign governments.”
He also said there is a risk that important data could be used or transferred illegally out of the country.
Last week, the cyber regulator ordered a cybersecurity investigation into the carpooling platform Didi Global Inc. The food delivery platform Meituan is also the subject of an anti-monopoly investigation, and the retail giant electronics Alibaba was fined a record $ 2.8 billion earlier this year for antitrust offenses.
China’s market regulator said the decision to ban the merger between Huya and Douyu is the first instance 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 was informed by the regulator that the merger was halted.
“The company will abide by the ruling, comply with all regulatory requirements, operate 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 tighten oversight of listed companies overseas.
Under the new measures, the regulation of data security and cross-border data flows, as well as the management of confidential data, will be improved.
The authorities also plan to crack down on illegal activities in the securities market and will investigate and sanction acts such as fraudulent issuance of securities, market manipulation and insider trading.
Meanwhile, the Cyberspace Administration of China ordered the removal of 25 apps owned by Didi Global Inc. from app stores. Didi is the largest VTC service in the country.
The authority cited serious violations of the rules banning the collection of personal data behind the move.
China’s Cyberspace Administration had already removed the main Didi app last Sunday, pending a cybersecurity review, after it entered the U.S. stock market last week.
The 25 additional apps include Didi Enterprises, as well as those designed for Didi pilots.
A spokesperson for Didi did not immediately respond to a request for comment.