US Senators Richard Blumenthal and Elizabeth Warren are concerned about “foreign influence and national security risks.” on Saudi Arabia's participation in the leveraged buyout of Electronic Arts.
Two Democratic senators warned against the acquisition, which would transform Electronic Arts from publicly owned to privately owned in a $55 billion deal. two separate letters On Tuesday, the letter was sent to US Treasury Secretary and Foreign Investment Committee Chairman Scott Bessent and Electronic Arts CEO Andrew Wilson, respectively.
In late September, Electronic Arts announced that a consortium of investors consisting of the Saudi Arabian Public Investment Fund, US private equity fund Silver Lake and Jared Kushner's investment firm Affinity Partners would take the company private and saddle the company with $20 billion in debt.
“By leveraging lasting changes in public opinion through PIF investments, Saudi Arabia seeks to normalize its global image, expand its cultural influence, and gain influence in the spaces that shape how billions of people connect and interact,” the senators wrote.
In the letter to Wilson, Blumenthal and Warren ask Electronic Arts to provide information on “how EA plans to continue to operate independently of the influence of an authoritarian government that has a history of using technology to retaliate against critics, engage in covert influence campaigns, and censor free expression.”
The senators said the national security risks include “surveillance of Americans, covert Saudi propaganda, and selective retaliation and censorship of individuals not favored by the Saudi government.” Electronic Arts' involvement in the artificial intelligence industry also poses a risk, they say, as the government “wins[s] access to EA research, work products and user data.”
Senators ask Committee on Foreign Investment to investigate
Analysts and gaming industry experts told Game Developer Earlier in October, Saudi Arabia's involvement in the deal was actually a play for “cultural legitimacy.”
“Games are the new oil,” said New York University School of Business associate professor Joost van Drunen. “The Saudi Arabian Public Investment Fund is using it to gain global cultural relevance while diversifying beyond oil.”
Saudi Arabia has already poured billions of dollars into the gaming and esports industry through the Public Investment Fund and other ventures, including the acquisition of Pokémon Go maker Niantic's video game business, as well as investments in Nintendo, Take-Two Interactive and others.
Blumenthal and Warren also expressed concerns about Kushner's involvement in the deal. They question whether Kushner's involvement is directly related to his relationship with Trump, suggesting that the deal would require Kushner to receive government approval.
The proposed buyout includes a $1 billion fee for Electronic Arts if the acquisition is not approved by US regulatory boards. This could be seen as a bet, the senators said, that Kushner's involvement could secure approval from the Trump administration: “Indeed, in keeping with the Trump administration's unprecedented corruption and monetization of federal government power, 'What regulatory body would turn away the president's son-in-law?'
Senators are asking the Committee on Foreign Investment in the United States to investigate the deal's “foreign influence and national security risks” and publicly report its findings.
