Tencent headquarters. Shutterstock.
China is preparing to slap a fine on Tencent Holdings Ltd. as part of its antitrust crackdown on the country’s internet giants, Reuters said, citing people with knowledge of the matter.
Tencent may face a fine of at least 10 billion yuan ($1.6 billion), which is less than the $2.8 billion levied upon fellow titan Alibaba Group Holding Ltd., according to the report. 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.
Neither the State Administration for Market Regulation nor Tencent responded to Reuters’ requests for comments. Tencent didn’t immediately respond to an email from Bloomberg seeking comment.
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 clamp down on Jack Ma’s Ant Group Co., people with knowledge of their thinking told Bloomberg in March.
The SAMR’s investigation focuses partly on Tencent Music Entertainment Group, according to Reuters. The watchdog has informed Tencent that it should expect a fine, give up exclusive music rights and may even be forced to sell the Kuwo and Kugou music apps it had acquired, the report said. Tencent’s core businesses of Wechat, its super app used for chatting and payments, as well as gaming will likely remain intact, Reuters reported.
Co-founded by billionaire Pony Ma, Tencent has a commanding lead in Chinese music, though that was weakened last year when NetEase Inc. 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 last February.
Beijing’s campaign against its internet giants has gathered pace in recent 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 anti-competitive business practices within one month. Following the meeting with SAMR, the Shenzhen-based firm issued a pledge to abide by antitrust laws, promising that it won’t 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 food-delivery behemoth Meituan 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’ve amassed through providing services like online shopping, chatting and ride-hailing.
By Zheping Huang