Chinese company Tencent and its majority-owned arm, Tencent Music Entertainment, are reportedly facing a potential hit in China as part of an antitrust clampdown by the regulators of the nation.
As per sources, the company was under investigation by anti-competitive watchdogs in China, a couple of years ago. Then, it was alleged of striking exclusive licensing deals with three prominent record companies in the Chinese territory.
These agreements of Tencent Music with Sony Music, Universal Music, and Warner Music allowed TME for licensing the music of the majors for its own platforms and also provide exclusive sub-licensing of these catalogs to local rivals. However, the anti-competition inquiry into Tencent was stopped after the company agreed for striking differently-structured music agreements.
Considering the present scenario, sources speculate that Tencent will be raked over the coals owing to its anticompetitive practices in some of its enterprises with particular focus on music streaming. This is partially because the company had given up its right of exclusive sub-licensing with the major labels. In spite of that, it continued to hold exclusive rights agreements with some individual artists, comprising Jay Chou, the pop superstar from Taiwan.
Reports state that, in the recent licensing agreements with Warner and Universal, each of which was announced in the last eight months, Tencent no longer has an exclusive sub-licensing right. This enables these firms to also strike separate direct agreements with NetEase Cloud Music, which is TME’s rival.
According to reliable sources, Tencent will now be forced by the State Administration of Market Regulation for relinquishing these rights. In an unprecedented move, the company might also be forced to sell off Kuwo and Kugou, two of its music apps, to competitors.
NetEase Cloud Music is the main competitor of Tencent Music in China, which loudly complained regarding the earlier exclusive sub-licensing agreement of TME with the music majors. Alibaba’s Xiami Music, which is the other main rival of TME, was shut down in the month of February 2021.