China to force Tencent to give up exclusive music rights

headphones jack 2156 1120 - China to force Tencent to give up exclusive music rightsChina’s antitrust regulator is set to order the music streaming arm of Tencent Holdings to give up exclusive rights to music labels which it has used to compete with smaller rivals, two people with knowledge of the matter said on Monday.

The State Administration of Market Regulation (SAMR) will also fine it C¥500 000 (R1.1-million) for lapses in reporting the acquisitions of apps Kuwo and Kugou, the people said — a milder penalty than the forced sale indicated earlier this year.

SAMR, Tencent Holdings and Tencent Music Entertainment Group did not respond to requests for comment.

The move is the latest in a clampdown to curb the economic and social power of China’s once loosely regulated Internet giants. The campaign, which began late last year, has included a record C¥18-billion fine on e-commerce firm Alibaba Group for abusing its market position.

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In April, Reuters reported that SAMR aimed to fine Tencent Holdings at least C¥10-billion, and that the social media leader was lobbying for leniency. It also reported that SAMR had told Tencent Music it may have to sell Kuwo and Kugou.

Instead, SAMR will no longer require a sale but will impose the maximum C¥500 000 fine for not properly flagging the 2016 app purchases for antitrust review, the people said on Monday.

‘Falls short’

“Personally, I think this punishment falls short and is even a boon for Tencent. The acquisitions obviously would restrict competition in the market, and should have been vetoed,” said You Yunting, a lawyer with Shanghai-based DeBund Law Offices.

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“It is too little a hit to Tencent Music’s dominant position in the market,” said You, a commentator on antitrust law.

On Saturday, SAMR said it would block Tencent Holdings’ plan to merge China’s two biggest videogame streamers — Huya and DouYu — on antitrust grounds.

Tencent Music, China’s equivalent to Spotify, had been pursuing exclusive streaming rights with labels including Universal Music Group, Sony Music Group and Warner Music Group to fend off competition.  — Reported by Pei Li, (c) 2021 Reuters

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