In the realm of video gaming, a significant shift has just occurred within Epic Games’ board of directors. Following a recent anti-trust investigation by the U.S Department of Justice (DoJ), two prominent men have resigned from their positions. The members in question, originally appointed by Tencent – a noteworthy stakeholder in Epic Games – were required to step down due to claims of potential anti-competitive behaviour.
Ben Feder and David Wallerstein, the individuals who have elected to step down, were both linked deeply with Tencent. Feder held the role of President of International Partnerships at Tencent for several years, following a term as CEO of Take-Two Interactive, a major publishing partner of Tencent. Wallerstein, on the other hand, served as the Senior Executive Vice President at Tencent till the beginning of this year before transitioning to the role of a Senior Advisor.
The U.S Government, under the Clayton Act, prohibits board members from holding simultaneous positions in competing companies. The Act specifies that it prohibits “directors and officers from serving concurrently on the boards of rival organizations, with limited exceptions.” Hence, having Feder and Wallerstein who were closely aligned with Tencent, on the board of Epic Games was deemed unacceptable due to the significant competition between the video game giants.
The analogy that best represents this situation can be drawn from the world of soft drinks industry: it would be equivalent to a senior executive at PepsiCo attending all key meetings at Coca-Cola. The fact that both Tencent and Epic Games are large-scale competitors in the video game industry exacerbates the concerns.
The DoJ has publicized this development through a press release, in which they implied that these resignations were established after a scrutiny into possible anti-trust violations. The investigation stemmed from the realization that Tencent, being a colossal entity owning Riot Games outrightly, should not have direct influence over its competitor, Epic Games.
Despite the high-profile resignations, the DoJ clarified, “No company or individual has admitted to liability in connection to this investigation.” It added that Tencent has consented to modify its shareholder agreement with Epic Games, thus preventing any future appointments of Tencent-appointed directors on the Epic Games board. Notably, this measure is anticipated to curb any potential boardroom improprieties or infringements.
It’s of crucial importance to understand that antitrust laws are designed to impede massive corporations from gaining monopolistic control and thus diminishing competition. The gaming industry has witnessed similar scenarios before. Valve, one of the largest digital distribution platforms for PC gaming, previously faced an antitrust lawsuit. Additionally, Microsoft endured critical reviews from both the U.S. and the European Union due to antitrust apprehensions when it proposed the acquisition of Activision Blizzard. However, it eventually succeeded in this endeavor.
These laws underscore the requirement for competition, which generally leads to better products and services for consumers, and also prevents any single company from controlling the market. The gaming industry is no exception as it becomes increasingly globalized and more substantial with each passing day. Whether it’s Tencent, Epic, or any other major player, each must play by the rules to ensure fair competition and enhance the gaming experience for all.
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