Tencent Music: Chinese regulators may demand the company to forgo its exclusive rights to its music labels

Tencent Music is reportedly facing a hefty fine and may lose its exclusive rights to its own music label. According to sources, China’s anti-trust regulators are likely to order the company to release its rights to its music assets.

Why Tencent Music may lose its rights to its music labels

As per Reuters, Tencent Music may also be slapped with ¥500,000 or around $77,227 fine for not properly reporting about its acquisition of two music apps, Kuguo and Kuwo. The penalty is set to be imposed after an anti-trust review carried out by the State Administration of Market Regulation (SAMR) determined that Tencent Music Entertainment Group misreported its purchase of the said apps in 2016.

The publication added that since April, the speculations that Tencent Music is facing fine have been floating around. However, it is not certain if the company is facing more antitrust penalties aside from what was already reported.

Now, under the terms of the penalty, a fine will be imposed, and the firm may have to sell both Kugou and Kuwo. Although some insiders believe the regulators may not request for the music apps’ sale anymore.

Tencent Music is the Chinese version of Spotify, and it has been offering streaming services to listeners after securing exclusive streaming rights with record labels. It has so far secured deals with Sony Music, Warner Music Group, and Universal Music.

Beijing’s interference in tech businesses

In any case, Bloomberg reported that the move to penalize Tencent Music, including the possibility to remove its rights from its music labels, comes as China heightens its drive to cut the growing influence of China’s major internet companies to almost every aspect of the country’s citizens’ lives - from online shipping to communication to ride-hailing.

The crackdown on companies has already led to the imposition of penalties to leading firms such as Alibaba Group and Didi. Now, Tencent Music is also under scrutiny and being checked by the local regulators. Meanwhile, the country’s antitrust watchdog started its probe into Tencent Group’s business dealings in 2019, and other homegrown firms are also facing investigations as part of the crackdown on tech companies.