China is preparing to slap a fine on Tencent Holdings Ltd (騰訊) as part of its antitrust crackdown on the nation’s Internet giants, Reuters said, citing people with knowledge of the matter.
Tencent might face a fine of at least 10 billion yuan (US$1.6 billion), which is less than the US$2.8 billion levied upon fellow titan Alibaba Group Holding Ltd (阿里巴巴), the report said.
The company faces penalties for not properly reporting past acquisitions and investments for antitrust reviews, as well as for anticompetitive practices in some businesses, particularly in music streaming, the news agency said.
Photo: Reuters
The campaign against China’s tech giants has already ensnared Alibaba and Meituan, and analysts have widely regarded Tencent as possibly being next in line. China’s top financial regulators in particular see Asia’s largest company as deserving increased supervision after the clampdown on Jack Ma’s (馬雲) Ant Group Co (螞蟻集團), people with knowledge of their thinking told Bloomberg last month.
The investigation by China’s State Administration for Market Regulation focuses partly on Tencent Music Entertainment Group (騰訊音樂娛樂集團), the report said.
The watchdog has informed Tencent that it should expect a fine, give up exclusive music rights, and might even be forced to sell the Kuwo (酷我) and Kugou (酷狗) music apps it had acquired, it said.
Tencent’s core businesses of Wechat, its super app used for chatting and payments, as well as gaming, would likely remain intact, Reuters reported.
Cofounded by billionaire Pony Ma (馬化騰), Tencent has a commanding lead in Chinese music, though that was weakened last year when NetEase Inc (網易) struck a deal to directly license songs from Universal Music Group for the first time.
China’s antitrust authorities had investigated Tencent’s dealings with the world’s three biggest record labels, but the probe was suspended, people familiar with the matter said in February.
Beijing’s campaign against its Internet giants has gathered pace in the past few weeks, as regulators slapped a record fine on Alibaba, instructed affiliate Ant to overhaul its business and ordered 34 of its largest tech companies — including Tencent — to rectify any anticompetitive business practices within one month.
Following the meeting with the regulator, Tencent issued a pledge to abide by antitrust laws, promising that it would not engage in monopolistic arrangements or illegal acquisitions and investments.
The possible penalty against Tencent comes after regulators this week announced an investigation into Wang Xing’s (王興) food-delivery behemoth Meituan (美團) for alleged abuses, including forced exclusivity arrangements.
The government has become increasingly concerned over the growing influence of titans like Alibaba, Tencent and Meituan over every aspect of Chinese life, as well as the vast amounts of data they have amassed through providing services such as online shopping, chatting and ride-hailing.
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