China is planning a major fine for Tencent Holdings as part of a crackdown on cybercrime, but it should be less than the $ 2.75bn report released to Alibaba earlier this month, two people familiar with the matter have said.
Tencent should expect a fine of at least 10 billion yuan ($ 1.54bn), enough for the State Administration of Market Regulation (SAMR) to set an example, both have said.
Tencent is facing penalties for misrepresentation of his previous findings and finances, fines of 500,000 yuan ($ 77,100) in each case, and anti-competitive practices in some of his businesses, where music is mainly sung, he said. sources.
SAMR or Tencent did not immediately respond to Reuters requests for comment.
“The suggestion from the supervisor is that unlike Alibaba you are not a big target here, but it would not be possible to punish Tencent now that the campaign is working,” said one of the protesters.
China a few months ago tried to tackle the economic power and culture of its unprofessional giants online, under the auspices of President Xi Jinping.
Tencent and Alibaba Group Holding Ltd are two major Chinese corporations, with a market capitalization of $ 776bn and $ 642bn, respectively.
Earlier this month, SAMR awarded a fine to Alibaba after the study found that the e-commerce company had been abusing its stock market for several years.
Many Tencent vendors include video games, platforms, promotions, promotions and cloud services.
The SAMR study focuses on Tencent Music Entertainment Group, which was selected and registered in the United States at the end of 2018, two of the people and other sources close to the business said. Tencent Music Entertainment did not immediately respond to a request for comment.
The supervisor told Tencent that he should expect a fine, relinquish music rights, and could be forced to sell music programs in Kuwo and Kugou, people said.
However, Tencent’s big business, video games and WeChat, need to remain strong, said one observer.
Tencent Music, China’s response to Spotify, acquired the competition programs Gouge and Kuwo in 2016, and pursued free advertising and content, including Universal Music Group, Sony Music Group and Warner Music Group Corp.
It then offered additional rights to competitors, including NetEase Cloud Music, which complained that the system was unfair and that its prices were too high.
SAMR launched an investigation into Tencent Music in 2018 but dropped it in 2019 after the company agreed to stop re-launching another franchise, which expires after three years, two sources told Reuters.
However, it retained exclusive rights for Jay Chou, the world-famous Chinese-speaking star, and used it as a rivalry against rivals NetEase Cloud Music and Aliami-sponsored Xiami Music.
Meet the music
SAMR has told Tencent Music that it should expect to give up some of the remaining freedoms, two people said.
It may also be necessary to sell Kugou and Kuwo to competitors or other businesses, one of the options offered to government officials in Beijing, three sources said.
The forced sale of the units could be exemplary and would be difficult to do, two of them warned.
The final confirmation of Tencent’s sanctions will need to be a concern from China’s central leadership, people say.
Tencent wants to receive a fine, he added.
“Tencent has no plans to pay more and is willing to pay more if needed, as long as its start-up business is still strong,” said one of the participants, referring to his video games and WeChat app features.
Last month, Reuters also announced that Tencent would need to achieve some of its goals of integrating Huya and Douyu, two leading television groups, in addition to providing opportunities to broadcast Tencent’s games to rivals.
SAMR said this week it was investigating Tencent-backed Meituan claiming that the food giant was forcing retailers to use their platform only, the same case in which Alibaba was convicted.