China antitrust: Tencent Music will have to give up music label exclusivity, sources say
- The penalty is the culmination of an investigation by China’s market regulator, the State Administration of Market Regulation (SAMR)
- On Saturday, SAMR said it would block Tencent’s plan to merge the country’s two largest video game streaming sites
The penalty, plus a 500,000 yuan (US$77,150) fine for misreporting the acquisition of two apps, is the culmination of an investigation by the State Administration of Market Regulation (SAMR) into Tencent Music Entertainment Group, China’s dominant music streaming company, the people told Reuters.
Reuters could not immediately determine whether Tencent Holdings faces further antitrust penalties beyond the expected ruling on Tencent Music.
SAMR, Tencent Holdings and Tencent Music did not respond to Reuters’ requests for comment on Monday.
Under the terms of the penalty, SAMR will fine Tencent Music for not properly reporting the 2016 acquisitions of competing apps Kugou and Kuwo for antitrust review, an offence capped at 500,000 yuan, the people said.
In April, Reuters reported that SAMR had told Tencent Music it may have to sell Kuwo and Kugou, but the people on Monday said it no longer faces that outcome.
SAMR began investigating Tencent Music in 2018 but stopped in 2019 after the company agreed to stop renewing some of its exclusive rights, which normally expire after three years, two people with knowledge of the matter previously told Reuters.
China has since late last year sought to curb the economic and social power of its once loosely regulated internet giants, in a clamp-down backed by President Xi Jinping.