Google Talks with Tencent to Buy Epic Games

A new report has revealed that Google had discussed working with Tencent to buy all of Epic Games’ shares.

This information came up in the hearing between Epic Games and Google (via The Verge). If you’re interested in the state of the video game industry, you can check out our other articles here.

Google Talks with Tencent to Buy Epic Games

According to the latest findings in the Epic Games and Google hearing, former Stadia CEO, Phil Harrison, proposed that Google could team up with Tencent and fully purchase the shares of Epic Games. Failing that, Google could purchase a 20% stake in Epic Games for US$2 billion.

The Verge reports that the hearing featured email testimony between Google executives who laid out the initial ideas and plans for the Google Play Store.

In July 2018, Phil Harrison wrote the following regarding the potential acquisition or purchase of Epic Games shares:

I have taken a high-level strategic rationale for investing in Epic.

Fortnite is (or could be) a major business driver for Google as a whole:

• YouTube (over 100 million increase in game-watching MAUs).
• GCP (to divert 130M+ players from AWS and build a major tenant in the game).
• Yeti (Fortnite + Unreal Engine support for all games).

Phill Harrison, Former CEO of Stadia

Dave Sobota, who served as director of corporate development at Google from 2008 – 2018, replied with the following message discussing potential plans to cooperate with Tencent in some way:

As a potential alternative, Phil proposed that we consider approaching Tencent to do one of the following two things:

• Purchased Epic shares from Tencent to gain more control over Epic (unclear how that helps us without a majority stake).
• Joining forces with Tencent to buy 100% of Epic (and of course we’ll be doing a lot of deep commercial stuff with Epic).

Dave Sobota, Former Director and Corporate Development at Google

The direct investment route saw Google propose to invest around US$2 billion for a 20% stake in Epic Games. Google then wrote that the company “will need a large investment to gain influence”.

Tencent’s route or controlling stake sounds very tentative because:

• The company may be open to a second large strategic investor as a counterweight to Tencent.
• Tencent may not be willing to sell shares or may seek to block other strategic investors (investor rights unknown).

Currently, Tencent owns about 40% of Epic Games and Sony Group Corporation owns 5% of Epic Games. Epic Games has been valued at more than 31 billion US dollars.