However, it eventually walked away from that deal due to Tencent's shift in strategy, as well as mounting regulatory scrutiny and an expected lengthy review process, one of the sources who had direct knowledge of the matter said. The sources said that Tencent had advised most of the unit's staff to seek other opportunities, confirming a Thursday report from Chinese tech news outlet 36Kr. Tencent declined to comment on the Black Shark deal and whether Beijing's scrutiny had soured the deal. Regarding the status of the XR unit, the company referred to a statement to Reuters on Thursday that said it was making adjustments to some business teams as development plans for hardware had changed. The company also said on Thursday that it was not disbanding the XR unit. Tencent shares slipped as much as 2.5% after Reuters' report.