Legal Battle Between NetEase and Tencent Could Set Major Precedent for China’s Music Industry.
Chinese tech company NetEase has filed an antitrust lawsuit against Tencent and against multimedia giant Tencent along with its music and entertainment arms, alleging abuse of market dominance.
According to NetEase, the lawsuit was officially accepted by the Zhejiang Higher People’s Court in 2024. At a hearing held in June this year, NetEase representatives alleged that Tencent engaged in anti-competitive practices, including the creation of technical barriers, copyright monopolization and control of user data. The company claims these actions have distorted market competition and harmed consumer interests.
Legal experts suggest that the trial’s high-court setting, rather than at an intermediate level, may indicate that NetEase is seeking compensation exceeding one hundred million yuan ($13.9 million) — a figure that underscores the gravity of the allegations and hints at far-reaching implications for the music industry if the claims are upheld.
This is not the first time Tencent has faced antitrust scrutiny. In July 2021, the State Administration for Market Regulation (SAMR) ordered Tencent to terminate its exclusive licensing agreements with upstream music copyright owners.This directive was designed to address longstanding allegations that Tencent’s practices harmed competition. SAMR's penalty was based on merger-control provisions rather than on those related to vertical monopolistic agreements, which was the focus of an earlier probe into Tencent Music Entertainment, or TME.
Despite these regulatory efforts, nearly four years after the decision, TME still controls more than 70 percent of China’s music streaming market, with NetEase Cloud Music holding the second-largest share.
Regulatory oversight of the digital music sector has intensified more broadly in China. In May this year, SAMR ramped up an examination of potential monopolistic practices of the world's three major music label giants — Universal Music Group, Sony Music Entertainment and Warner Music Group — to assess whether excessive royalties and unfair trading terms are being imposed on Chinese streaming platforms.
The outcome of the NetEase – Tencent dispute could serve as a landmark decision, potentially reshaping the rules of engagement in China's online music industry.
Source: MLex
