Tencent ordered to end exclusive music deals as crackdown continues

An official investigation found Tencent's 2016 acquisition of China Music Corporation's stakes violated regulations.
An official investigation found Tencent's 2016 acquisition of China Music Corporation's stakes violated regulations.PHOTO: REUTERS

BEIJING • Tencent Holdings was ordered to give up exclusive music streaming rights and pay half a million yuan in fines, becoming the latest Chinese Internet giant to be brought to heel by regulators.

An official investigation found Tencent's 2016 acquisition of China Music Corporation's stakes violated regulations partly because of a lack of reporting to the authorities, according to a statement by the antitrust watchdog yesterday.

The State Administration for Market Regulation (SAMR) required Tencent and its affiliates to waive exclusive music rights within 30 days and handed down a fine of 500,000 yuan (S$105,000).

That deal had helped create Tencent Music Entertainment Group, which was formed after the merger of QQ Music and China Music Corp.

The government agency also asked Tencent chief executive officer Pony Ma's social media and gaming giant and its affiliates to stop demanding music copyright holders to give it better treatment than its competitors through practices such as providing high advance payments. The companies must submit their plans for rectification within 10 days to the watchdog and continue to report on their enforcement of the changes annually in the next three years.

Tencent will make rectification plans with its affiliates including Tencent Music Entertainment within the time limit designated and "faithfully" carry out the SAMR's order to ensure all requirements are met, the company said in a statement on its official WeChat account.

The penalty levied on Tencent marks the most direct hit to Asia's most valuable corporation from Beijing's escalating campaign against its tech giants.

Fellow Internet behemoth Alibaba Group Holding was fined a record US$2.8 billion (S$3.8 billion) in April for antitrust violations, while its affiliate Ant Group had to scrap an initial public offering and restructure into a financial holding company.

Firms backed by Tencent have also come under scrutiny: food-delivery leader Meituan is facing an anti-monopoly probe while Didi Global, operator of the country's largest ride-hailing service, was this month ordered off Chinese app stores by regulators.

Beijing has sought to curtail the growing influence of China's powerful Internet corporations over every aspect of Chinese life from online shopping to chatting to ride hailing. Such a campaign is now extending into the arena of data security, with President Xi Jinping's government said to be exploring a number of models and actions to open up their information hoards.

Financial regulators are also planning rule changes that could block Chinese firms from listing overseas even if the unit selling shares is incorporated outside China, people familiar with the matter said.

Prior to the latest order, the antitrust authorities have already imposed token fines on Tencent over the past seven months for not seeking approval for a number of past investments and acquisitions.

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A version of this article appeared in the print edition of The Sunday Times on July 25, 2021, with the headline 'Tencent ordered to end exclusive music deals as crackdown continues'. Subscribe