China continues to keep a tight reign on Chinese technology giants mainly to reduce their power in acquiring the tech innovations of other domestic firms. Just recently, China’s State Administration for Market Regulation (SAMR) imposed a fine of 500,000 yuan on China-based multinational conglomerate company Tencent, for being anti-competitive. Moreover. SAMR ordered Tencen to give up its exclusive music licensing rights.
Actually the 500,000 yuan, which is equivalent to $77,141, was slapped on the company, for an anti-competitive violation cited when Tencent acquired China Music in 2016. However, SAMR actually imposed the 500,000 yuan fine only a few days prior to this writing.
Through the years, this tech giant reigned supreme over competitors, particularly in the music industry. In owning over 80% of exclusive music library resources in the country, Tencent has been extending more exclusive deals than other domestic copyright holders in China. Now the state regulator has finally brought down the axe on the multinational conglomerate by ordering Tencent and its affiliates, not only to give up their exclusive music rights.
The China-based company also lost its power to impose additional requirements for copyright holders just so the latter could receive better treatment; such as requiring high advanced payments in exchange for gaining advantage against their respective competitors.
The Tencent Crackdown is Part of Beijing’s Greater Movement to Subjugate China’s Internet Giants
The intensified crackdown on Tencent is actually connected to Beijing’s move to subjugate internet giants in the country. The main objective is to reduce the power of domestic technology firms that are currently regarded as globally top-ranked valuable companies. Stopping anti-competitive practices is only one of the current actions being taken to suppress the overwhelming abilities of these businesses, as SARM is also ordering the investigation of Chinese companies with overseas listings in the U.S, specifically with reward to data security.
That being the case, big Chinese companies like Tencent has to send comprehensive reports to SAMR, to provide details of its progress for three consecutive years. Apparently, Tencent and its affiliates will be constantly monitored for implementation of China’s laws.
Tencent’s WeChat messaging technology for one, is the most favored platform for chat messaging in games, fintech services and music. WeChat’s current market value is almost $656 billion and investors fear that its listing in the Hong Kong securities market might also be affected by SAMR’s latest regulatory orders.