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China Orders Tencent to Give Up Exclusive Music Licensing Rights as Crackdown Continues

Aly Song | Reuters
  • The State Administration for Market Regulation on Saturday ordered Tencent to give up its exclusive music licensing rights and slapped a fine on the company for anti-competitive behavior.
  • The competition watchdog ordered Tencent and its affiliates to relinquish its exclusive music rights within 30 days, and to end requirements for copyright holders to grant the company better treatment than to its competitors.
  • In response, Tencent said it will "comply with all the regulatory requirements, fulfill our social responsibilities and contribute to healthy competition in the market."

China's antitrust regulator has ordered Tencent to give up its exclusive music licensing rights and slapped a fine on the company for anti-competitive behavior, as Beijing continues to crack down on its internet giants at home.

The State Administration for Market Regulation (SAMR) on Saturday imposed a fine of 500,000 yuan ($77,141) on the company citing violations in its acquisition of China Music in 2016.

Following that acquisition, Tencent owns more than 80% of exclusive music library resources, giving the company an advantage over its competitors as it is able to reach more exclusive deals with copyright holders, SAMR said in a statement.

The competition watchdog ordered Tencent and its affiliates to relinquish exclusive music rights within 30 days, and to end requirements for copyright holders to grant the company better treatment than to its competitors.

Tencent will have to report to the SAMR on its progress every year for three years, according to the statement, and the antitrust regulator will strictly supervise its implementation according to law.

In response, Tencent said in a statement it will "comply with all the regulatory requirements, fulfill our social responsibilities and contribute to healthy competition in the market."

Tencent will work with affiliates, including Tencent Music Entertainment, to make those changes and ensure full compliance, it said.

China's grip on internet giants

The latest regulatory crackdown comes as Beijing continues to curb the power of its domestic technology firms that have grown to become some of the most valuable companies in the world.

Tencent's business includes WeChat — China's most popular messaging service, games, music and fintech services. Tencent, which is listed in Hong Kong, has a market value of nearly $656 billion.

China's widening clampdown has ranged from anti-competitive practices, to data security as well as increased scrutiny on Chinese companies with overseas listings in the U.S.

Just this month, Chinese regulators launched a cybersecurity probe on Chinese ride-hailing service Didi days after its massive U.S. IPO. In the past year, Beijing also slapped a $2.8 billion antitrust fine on Alibaba and suspended Ant Group's $34.5 billion IPO.

In April, the SAMR summoned 34 companies including Tencent and ByteDance, and ordered them to conduct self-inspections so as to comply with anti-monopoly rules.

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