China’s Tencent ordered to end exclusive music contracts

by Joseph K. Clark

Chinese regulators have ordered internet giant Tencent to end exclusive contracts with music copyright holders

BEIJING — Internet giant Tencent was ordered by regulators to end exclusive contracts with music copyright holders, adding increased enforcement of anti-monopoly and other rules as Beijing tightens control over booming online industries.

exclusive music contractsTencent controls more than 80% of “exclusive music library resources” following its 2016 acquisition of China Music Group, the State Administration for Market Regulation said Saturday. It noted that gives Tencent the ability to get better terms than competitors receive or limit rivals’ ability to enter the market.

To “restore market competition,” Tencent must end exclusive music copyright contracts within 30 days, the market regulator said in a statement. The company is barred from requiring providers to give better terms than competitors receive.

Tencent promised on its social media account to “conscientiously abide by the decision.” Regulators enforce anti-monopoly, data security, financial and other rules against Tencent, e-commerce giant Alibaba Group and other companies that dominate entertainment, retail, and other industries.

The enforcement has hurt the stock market value of some companies. Shares in ride-hailing service Didi Global Inc., which made its U.S. stock market debut last month, are down 21% after regulators announced a probe of its “network security” and ordered the company to overhaul customer data handling.

Regulators have publicly warned major companies not to use their market dominance to keep out new competitors. Tencent was blocked by regulators on July 10 from combining its game platforms Douyu and Huya because it might reduce competition.

On Wednesday, the Chinese internet regulator reprimanded Tencent, Alibaba, microblog platform Sina Weibo and e-commerce service Xiaohongshu for allowing sexually suggestive stickers or short videos of children to be distributed on their services.

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