After Alibaba, Tencent Set To Face Antitrust Fine In China: Report

Tencent Holdings ADR TCEHY could be slapped with a substantial fine as China’s regulators clamp down on the country’s internet giants, Reuters reported Thursday.

What Happened: According to the report, Chinese regulatory body State Administration of Market Regulation could slap a fine of at least $1.54 billion on Tencent, but it will likely be less than the record $2.8-billion penalty imposed on Alibaba earlier this month.

Billionaire Pony Ma-led Tencent faces the penalties related to probes on anticompetitive practices in some businesses, particularly in music streaming, not reporting past acquisitions properly and investments for antitrust reviews, the report said.

The probe led by SAMR partly focuses on Tencent Music Entertainment Group TME, which was spun off and listed in the United States in late 2018, the report said, citing sources. 

The regulator wants Tencent to give up exclusive music rights, and it may even be forced to sell the Kuwo and Kugou music apps that the Shenzen-based company acquired in 2016, and expect to pay a penalty.

See Also: China's Tech Crackdown Turns Toward Tencent-Backed Douyu, Huya Merger

Tencent and Alibaba Group Holding Ltd BABA are China's top two tech conglomerates. Tencent's businesses include video games, content streaming, social media, advertising and cloud services.

Why It Matters: Chinese tech giants have recently come under a regulatory crackdown that is backed by President Xi Jinping and aimed at curbing the economic and social power after years of loose state oversight.

The development also comes a day after Alibaba-backed Ant Group came under fresh regulatory scrutiny as China is now probing how its co-founder Jack Ma won quick approvals for the stock’s initial public offering last year.

See Also: Ant Troubles Not Over? Jack Ma's Relations With Regulators Said To Be Under Beijing Scrutiny

TCEHY Price Action: Tencent shares were down 1.76% at $79.83 Thursday.

Photo by そらみみ via Wikimedia.