China regulatory crackdown continues on Tencent for cited violations on exclusive music licensing rights

 

On Saturday, the State Administrator for Market Regulation (SAMR), China’s watchdog for competitive behavior ordered corporate giant Tencent to give up its exclusive music licensing rights. It also placed a hefty fine on the company. Earlier this month, Reuters had reported the possibility of these actions as sources with knowledge about this matter had informed the agency.

 

Tencent has been told by SAMR that the company, along with its affiliates, has to give up exclusive music rights within 30 days. It also has to stop getting better treatment from the copyright licenses it holds, when compared with other companies.

 

In 2016, Tencent had purchased China Music. According to a statement by SAMR, after it acquired the company, Tencent became the owner of more than 80 percent of exclusive music resources. This gave the internet giant a big advantage over its rivals as it also enabled the company to get exclusive and preferential deals with copyright holders.

 

The SAMR deemed this acquisition as anti-competitive and penalized the company with a fine of 500,000 yuan which is approximately equal to $77,140. The Chinese regulator also said that the company had to report its progress to the regulator every year, for the next three years and it would monitor the implementation of its order, according to law.

 

Tencent also released a statement saying that it would be in compliance with all the regulatory requirements. They would fulfill their social responsibilities and would contribute to fostering healthy competition in the market.

 

The internet giant said that it would work Tencent Music Entertainment, its affiliate and make the necessary changes ordered by the regulatory body. It also said that it would ensure total compliance. Tencent’s music affiliate was similar to Spotify in its reach but will now have to work harder to keep its users, after the crackdown.

 

China’s administration has been cracking down on its home-grown technology and internet giants who have not only been growing in size but have also been listing or trying to list overseas. Earlier, one of the largest ever listings — the Ant’s Group’s IPO was suspended. Beijing placed a $2.8 billion fine on Alibaba for antitrust activities. China’s largest ride hailing app Didi, which recently listed in the U.S., is under a cyber security investigation.

 

Beijing has taken a tough stance on antitrust and anti-monopoly rules which it says have been flouted by private companies. These companies have become huge conglomerates in recent years and are being brought in line with the country’s policies.

Image- Sinchen.Lin


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