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© Reuters. File photo: In this illustrated picture taken on March 22, 2021, the logo of China’s Tencent Music Entertainment Group is located next to the headset. REUTERS/Florence Lo/Illustration

Author: Li Pei

HONG KONG (Reuters)-Two people with direct knowledge of the matter said on Monday that Chinese antitrust regulators are prepared to order Tencent Holdings (OTC:) Ltd’s music streaming division to give up its exclusive rights to music brands.

This fine, plus a fine of 500,000 yuan (US$77,150) for misreporting the acquisition of two applications, is the result of an investigation by the State Administration for Market Regulation (SAMR). Tencent Music Entertainment Group People familiar with the matter told Reuters that China’s major music streaming company (NYSE:).

In April this year, Reuters reported that as part of a full-scale antitrust crackdown on Chinese Internet giants, regulators are preparing to fine Tencent Holdings. Two people familiar with the matter said that the company is expected to face a fine of at least RMB 10 billion. .

People said at the time that the gaming and social media leader was lobbying for more lenient penalties.

Reuters could not immediately determine whether Tencent Holdings faces further antitrust penalties in addition to the expected ruling by Tencent Music.

The State Administration for Market Regulation, Tencent Holdings and Tencent Music did not respond to Reuters’ requests for comment on Monday.

According to people familiar with the matter, according to the penalty clause, the State Administration for Market Regulation will impose a fine of 500,000 yuan on Tencent Music for failing to correctly report the anti-monopoly review of the 2016 acquisition of competitive apps Kugou and Kuwo.

In April this year, Reuters reported that the State Administration for Market Regulation had told Tencent Music that it might have to sell Kuwo and Kugou, but people on Monday said that it no longer faces this result.

Nevertheless, the State Administration for Market Regulation said on Saturday that it would prevent Tencent Holdings from merging China’s two largest video game streaming website operators Huya (NYSE:) Company and Douyu International Holdings (Nasdaq:) Co., Ltd.-on the grounds of antitrust, confirmed the earlier report by Reuters.

Exclusivity

Two people familiar with the matter previously told Reuters that the State Administration for Market Regulation began investigating Tencent Music in 2018, but stopped the investigation in 2019 after the company agreed to stop renewing some of its exclusive rights (usually expiring after three years) .

Tencent Music, China’s equivalent Sonic Technology SA (NYSE:), has been seeking exclusive streaming rights with record companies including Universal Music Group, Sony (New York Stock Exchange:) Music Group and Warner Music Group.

However, it retains the music exclusive rights of Jay Chou (one of the most influential artists in the Chinese-speaking world), and it is used with some others as a competitive advantage against smaller competitors.

Since the end of last year, with the support of President Xi Jinping, China has been trying to contain the economic and social power of its once loosely regulated Internet giant.

In April, the State Administration for Market Regulation set a record fine of 18 billion yuan Alibaba (New York Stock Exchange:) Group Holdings Co., Ltd., ruled that e-commerce leaders have abused its dominant market position for many years.

($1 = 0.1543 renminbi)

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