China’s State Administration on Market Regulation on Saturday ordered the multinational technology conglomerate Tencent Holdings, Ltd. to relinquish all exclusive music label rights that they currently possess. The company was fined half a million yuan, or around USD $77,000, for unfair market practices relating to their 2016 purchase of the Chinese Music Corporation. Tencent had aimed to incorporate this successful company into their own music corporation known as Tencent Music.
The State Administration on Market Regulation, in an effort to restore market competition in the country, released this statement regarding Tencent’s bar and fine:
To restore market competition, Tencent and its affiliated companies must end their exclusive music copyrights within 30 days and stop charging high prepayment and other copyright fees…Tencent should not demand superior treatment compared to competitors from copyright owners without justified reasons.
This action comes following Beijing’s recent crackdown on large, influential information technology (IT) companies around the country. In April of this year, the massive Chinese company Alibaba accepted the $2.75 billion fine levied against them after a probe found it had abused its market position for quite some time. The fine accounted for almost 4% of the company’s entire 2019 revenue stream.
With this bar, market regulators hope that these new actions against large corporations such as Tencent and Alibaba act not only as a deterrent, but will help to reshape the country’s business competition and minimize the barrier for entry into the ever-expanding Chinese market itself.