[Asia Economy Reporter Junhyung Lee] Chinese regulatory authorities have ordered the domestic internet giant Tencent (騰迅) to relinquish its exclusive online music rights. This measure follows a determination that Tencent violated antitrust laws in the music streaming sector.
The State Administration for Market Regulation (SAMR) of China announced on the 24th that after investigating Tencent's 2016 acquisition of China Music Group since January, it reached this decision.
According to major foreign media on the same day, Chinese music streaming companies have been striving to secure exclusive music rights amid intensified crackdowns on piracy by regulators in recent years. The investigation revealed that at the time of the merger, Tencent and China Music Group held 30% and 40% respectively of the online music market share.
Furthermore, through exclusive streaming contracts with global record labels such as Universal Music and Sony Music, Tencent's share of exclusive online music rights in the Chinese market exceeded 80%. Authorities judged that Tencent hindered competition by raising market entry barriers, either by contracting more exclusive rights with record companies or by paying large advance fees.
The authorities instructed Tencent to give up its exclusive music rights and cease paying large advance fees within 30 days. Tencent must report its compliance status to the authorities annually for the next three years. Additionally, Tencent was fined 500,000 yuan (approximately 88.85 million KRW).
Meanwhile, Chinese authorities are tightening regulations on rapidly growing internet companies including Tencent. Earlier, ride-sharing company Didi Chuxing (滴滴出行) was banned from app downloads within China after its recent listing on the New York Stock Exchange. In April, Alibaba was fined 18.228 billion yuan (approximately 3.2 trillion KRW), the highest amount ever under China's antitrust law.
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