Tencent Holdings Ltd. is planning to merge China’s biggest game-streaming platforms Huya Inc. and DouYu International Holdings Ltd., people familiar with the matter said, in a deal that would allow it to dominate the $3.4 billion arenas. The Chinese social media titan which owns a 37 per cent stake in Huya and 38 per cent of DouYu has been discussing such a merger with the duo over the past few months, although details have yet to be finalized, said the people, who asked not to be identified because discussions are private. Tencent is seeking to become the largest shareholder in the combined entity, one person said.

A deal would create an online giant with more than 300 million users and a combined market value of $10 billion, cementing Tencent’s lead in Chinese games and social media. Faced with rising competition for advertisers from ByteDance Ltd. and its rapidly growing stable of apps, the WeChat operator would then run a highly profitable service akin to Amazon.com Inc.’s Twitch. Huya and DouYu would keep their respective platforms and branding while working more closely with Tencent’s own esports site eGame, said the people.

Douyu’s shares surged 18% in pre-market trade in New York, while Huya soared 15%. Tencent climbed 2% to a two-week high in Hong Kong.

“As the major shareholder of both platforms, Tencent would benefit because a merger would remove unnecessary competition between them,” Bloomberg Intelligence analyst Vey-Sern Ling said. “The enlarged scale can also help to drive cost synergies and fend off emerging competitors.”

Tencent and DouYu representatives declined to comment, while Huya spokespeople didn’t respond to requests for comment.

Tencent’s shoring up its home-market position against the backdrop of a Trump administration increasingly hostile toward Chinese tech companies. WeChat has a limited U.S. presence and Trovo Live, a mobile-focused game-streaming service for American consumers, is only in its initial stages.