China's Antimonopoly Service forced investment holding Tencent (HKG: 0700) give up licensing rights to music and issued a fine.
What's the matter?
IN 2016 Tencent bought China Music. After the deal, the company received over eighty percent of the exclusive rights in the music market.. According to the regulator, Tencent has an edge and can do deals with copyright holders on more lucrative criteria. The rest of the streaming services cannot compete with Tencent on equal terms..
5 years after the takeover, the regulator decided to fine the company. The amount of the fine is RMB 500,000, or 77 one thousand dollars. Tencent also owes 30 days to relinquish licensing rights and finish concluding contracts with copyright holders on non-market criteria.
Now Tencent and its subsidiaries, также Tencent Music Entertainment (NYSE: TME), for 3 years will provide reports to the antimonopoly service. Tencent said, that they will comply with all regulatory requirements, do social duties and work in the criteria of healthy market competition.
Prior to this, the anti-monopoly service prohibited the company from sucking in Huya (NYSE: HUYA) и DouYu (Nasdaq: DOYU) - Popular video game streaming platforms in the PRC.
Tencent is a $ 656 billion Chinese investment and venture capital firm. Tencent's subsidiaries are various web services: social networks, music venues, payment systems, online games and other. The company is known as the developer of WeChat - the most popular Chinese messenger.
For large Tencent, a fine of 77 thousand dollars is not a big problem. More important is, that recently, the Chinese government, for various reasons, has been openly fighting the growing influence of Internet giants. Everyone helps: Market Regulatory Administration, Cyberspace Administration and even the Ministry of Education.
Another company was fined by the antitrust authority last year, online retailer Alibaba (NYSE: BABA), on 2,8 billion dollars. In July, immediately after the IPO, Cyberspace Administration Launches Investigation Of DiDi Taxi Service (NYSE: DIDI) and two more startups. Later it became known: the authorities decided to seriously punish DiDi.
And last week there was evidence that, that the regulator wants to restrict the work of companies from the education sector and make the sector non-profit. On Friday, 23 july, on these news promotions TAL Education (NYSE: TAL) fell on 71%, to 6 $. The very next day, the country's government officially confirmed its intentions. On Monday, 26 july, TAL papers fell another 30%. According to data on 11:20 in Moscow, TAL shares are traded at 4,2 $ on the premarket of the New York Stock Exchange.