Tencent Holdings Ltd. (0700.HK, TCEHY, or Tencent) is in talks to sell a popular virtual reality (VR) headset from Facebook parent Meta Platforms Inc. (META) in China. China has the world’s largest Internet user base.
Tencent, China’s largest gaming company, has proposed to Meta to be the exclusive seller of the Meta Quest 2 headset in China, according to people familiar with the talks. Tencent is also looking to release Chinese versions of existing Quest 2 games, the people said.
The talks, which began in recent months, are still at an early stage and a deal could still end up falling short, some of the people said.
Issues to be addressed include what to do with user data, whether global macroeconomic conditions are right for a partnership, and whether any deal between the two largest tech companies, which are U.S. and Chinese, would cause tension between the two countries, these people said. Government scrutiny. In addition, if Tencent and Meta reach an agreement, they may also face strict regulations on games in China.