Chinese regulator’s hammer has kept hitting players in its tech industry for months now, accelerating the government’s push to keep the industry under control.
China’s market regulator on Saturday said it would bar Tencent Holdings Ltd from exclusive music copyright agreements and fined the company for unfair market practices in the online music market after its acquisition of China Music Corporation. Reuters has the report.
It follows other antitrust actions that have in recent months been leveled against the country’s large tech companies, including a record $2.75 billion fine on e-commerce giant Alibaba for engaging in anti-competitive behaviour.
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Tencent and Tencent Music Entertainment Group, the unit created from the acquisition, said they would abide by the decision and comply with all regulatory requirements.
The State Administration of Market Regulation (SAMR) said it had investigated Tencent’s activities in the online music broadcasting platform market in China, in which music copyright is the core asset, in a notice posted on its official website.
Reuters reported in mid-July that the antitrust regulator would order Tencent’s music streaming arm to give up exclusive rights to music labels that it has used to compete with smaller rivals, citing people with knowledge of the matter.
Tencent held more than 80% of exclusive music library resources after its acquisitions, the regulator said, increasing its leverage over upstream copyright parties and allowing it to restrict new entrants, the regulator said.
SAMR said Tencent and its affiliated companies must not engage in exclusive copyright agreements with upstream owners of such rights, while existing agreements must be terminated within 30 days of the regulatory notice.
The regulator also ordered Tencent to pay a fine of 500,000 yuan ($77,150).
Earlier this month, the regulator said it would block Tencent’s plan to merge the country’s top two videogame streaming sites, Huya and DouYu, on antitrust grounds.
The culminating crackdown, which is fast touching the big names in China’s online space, is not only depleting the companies’ value but it’s also creating uncertainties for them. Earlier this month, Didi, the fast-rising ride-hailing company got its fair share of the treatment two days after going public in the US. Didi was stopped from registering new customers, and had its app pulled from China’s app market. The authorities are also after a video platform run by ByteDance that it said glorifies teenage pregnancy.
On Friday, the government’s decision to turn its $100 billion edtech industry to non-profit was confirmed, heightening investors’ fear about the future of Chinese startups and established companies.
“They (the crackdowns) send a stark message to Chinese businesses about the government’s authority over them, even if they operate globally and their stock trades overseas. And they are a reminder to international investors in Chinese companies about the regulatory curveballs that can sometimes come hurtling their way,” New York Times noted in a report.
But there is more. In the competitive digital age that has been narrowed to a battle of dominance between China and the United States, clipping the high-flying wings of its internet companies places China in a jeopardizing position.
Although the US has been mulling breaking up the big tech, a move that will curtail the global dominance of its tech giants, it may unlikely be, and China’s crackdown on the big names in its internet space will mean that the US tech industry will for long stay dominant.