Shares in Shenzhen-based media titan Tencent tumbled on Monday following China’s verdict to restrict its private music licensing deals with record labels around the globe, halting the platform’s efforts to show sovereignty over online music streaming in the country.
On Saturday, China’s State Administration of Market Regulations (SAMR) announced that the firm is not abiding by the country’s anti-monopoly rules regarding its interests in the online music market.
This is demonstrated in authority’s latest quest to force the music platform to give up exclusive rights to music labels revealing the Chinese government’s scrutiny over the music streaming firm.
Chinese authorities instructed Tencent and its associated companies to end any existing agreement in the upcoming 30 days after receiving the regulatory notice, and must not indulge in any private copyright agreements with upstream owners.
During that time, Chinese regulators ordered the music streaming titan to pay a fine of $77,000, as a result to its actions.
This is one of China’s latest actions held against some of the country’s rising Big Tech firms, in its attempt to step up its anti-monopoly actions.
As tensions escalate between China and its Big Tech firms, authorities have been investigating some of the country’s most influential tech platforms, such as Alibaba, ride-hailing app Didi, and Tencent’s messaging toll QQ.
In Hong Kong, Tencent Holding shares witnessed a whopping drop by 5.7 percent in its market value, whereas Tencent Music Entertainment shares were lower by 6.9 percent.
Some of the world’s most famous record labels have all conducted exclusive deals with the Chinese streaming platform which gave it access to thousands of music catalogues.
Some of these big names include Universal Music, Sony Music, and Warner Music.
Back in 2016, Chinese internet giant Tencent approved to the acquisition of controlling stake in China’s biggest music-streaming company in a deal with China Music Corp.
This deal turned Tencent into one of China’s most important market leaders as it brought the country’s top mobile music applications together, by handing it rights to China Music Corp. which about 80 percent of domestic market.
Earlier this year, Tencent shares tumbled over 5 percent after a huge 11 percent rally the day before it pushed its estimate value to almost $1 trillion for the first time in the company’s history.
In a response to the SAMR’s recent regulations, Tencent and Tencent Music Entertainment said they will abide by the ruling comply with the requirements laid out by the regulator.