China exclusive to Tencent Music to end music label exclusivity – Reuters sources

By the hand of Pei Li

HONG KONG (Reuters) -China’s antitrust regulator is ready to promise an arm to play music at Tencent Holdings (OTC 🙂 Ltd, two people who know about the subject of granting exclusive rights to music labels it has used to compete with smaller rivals. he said Monday.

The State Administration of Market Regulation (SAMR) will also impose a fine of 500,000 yuan ($ 77,150) on reporting purchases of Kuwo and Kugou apps, people told Reuters – a lighter penalty than the mandatory sale earlier this year.

SAMR, Tencent Holdings and Tencent Music Entertainment Group (NYSE:) Reuters has not responded to requests for comment.

The movement is the latest to stop the economic and social power of internet giants that were once poorly regulated in China. The campaign, launched at the end of last year, has set a record 18 billion yuan in the e-commerce company Alibaba (NYSE 🙂 Group Holding Ltd for abusing its position in its market.

In April, Reuters reported that SAMR intended to impose a fine of at least 10 trillion yuan on Tencent Holdings, and that the social media leader was pushing for agility. Reuters reported that SAMR had told Tencent Music that it had to sell Kuwo and Kugou.

Instead, SAMR will not demand a sale, but will impose a fine of up to 500,000 yuan for not properly marking the purchase of 2016 applications for antitrust review, people said on Monday.

“Personally, I think that penalty falls short and is also beneficial for Tencent. The acquisition would obviously reduce market competition and veto it,” said You Yunting, a lawyer for the Shanghai DeBund Law Office.

“It has little success in Tencent Music’s leading position in the market,” You said, commenting on the antitrust law.

Reuters has been unable to determine whether Tencent Holdings will receive a penalty against the competition beyond the expected resolution on Tencent Music (China’s mainstream music).

On Saturday, SAMR said it would block Tencent Holdings’ plan to merge China’s two largest video game streams – Huya (NYSE 🙂 Inc and DouYu International Holdings (NASDAQ 🙂 Ltd – for antitrust reasons, confirming an earlier Reuters report.

EXCLUSIVITY

Tencent Music, the equivalent of China Spotify Technology SA (NYSE :), which was looking for exclusive streaming rights with labels like Universal Music Group, Sony (NYSE 🙂 Music Group and Warner Music Group Corp. to compete.

The SAMR investigation was conducted in 2018 and was stopped the following year after the company agreed not to renew some of its exclusive rights, which usually expire in three years, Reuters reported earlier.

However, he retained exclusive music rights to a number of acts, including Jay Chou, one of the world’s most influential Chinese-speaking artists in the world.

Following SAMR’s latest ruling, Tencent Music will be able to at least retain its rights to music from some of the house’s indie acts, a person familiar with the matter told Reuters on Monday.

The loss of exclusive rights means that Tencent Music will have to redouble its efforts to build an interactive and vibrant community of users. The company has diversified its content through long-form sessions and live interviews to attract more paid users and advertisers.

Tencent Music has a big challenge with ByteDance. The Douyin app is being used – the Chinese version of TikTok – to promote music backed by sophisticated algorithms.

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