Tencent breaks China’s anti-monopoly law, shares plunge

China’s State Administration of Market Regulation (SAMR) on Saturday (24 July) declared that Tencent’s activities in the Chinese online music market violated China’s anti-monopoly law. SAMR also fined the firm 500,000 yuan or $77,120 for what it considered to be an unfair business practice.

The ruling was made based on the fact that Tencent controls more than 80% of China’s exclusive music streaming rights after acquiring China Music Corporation in 2016. Tencent has also struck deals with global music giants, such as Universal Music, Sony Music and Warner Music, expanding the music catalogue on its streaming platform. 

The control Tencent has on exclusive music streaming rights in China created an environment in which rival businesses cannot compete on a level playing field. SAMR ordered the firm to relinquish its exclusive music rights within 30 days. However, the company is still permitted to retain exclusive deals with independent artists, as they expire after three years.

Tencent stated that it will abide by the ruling and comply with all regulatory requirements. Shares of Tencent Holding were down by 5.7% in Hong Kong, while shares of Tencent Music Entertainment Group dropped by 6.9%.

Tencent still fares better than Chinese ride-hailing giant Didi, which sees its shares plunging by more than 40% after the Cyberspace Administration of China (CAC) reported that the company has been collecting user data illegally. Chinese regulators are considering serious penalties for Didi.