From the end of 2020 to the first few days of Tencent Music’s fines, the frequency of penalties for antitrust cases by China’s regulatory authorities has increased, and the severity of penalties have also increased.
Alibaba’s hefty fines
Since 2015, Alibaba Group has abused its dominant position in the domestic market by asking merchants on the platform to “choose one” and prohibiting these merchants from opening stores or participating in promotional activities on other platforms. Alibaba has also borrowed market power, Platform rules, data, algorithms and other technical means, adopt a variety of reward and punishment measures to ensure the implementation of the “choice of two” requirements, maintain and enhance its own market power, and gain an unfair competitive advantage.
In April, China’s State Administration for Market Regulation accused the e-commerce giant Alibaba Group of violating the Anti-Monopoly Law and fined it 18.228 billion yuan (US$2.78 billion), the highest amount ever in China’s Anti-Monopoly Law.
Warnings and opportunities
The numerous fines that China has issued to Internet companies in anti-monopoly are a reminder when companies invest and operate, and they also provide a fairer environment for market participants. According to the “Anti-Monopoly Law” and the “Provisions of the State Council on the Standards for Declaration of Concentration of Undertakings”, before a merger, an enterprise should conduct an assessment and make a declaration in accordance with the law.
For ordinary market participants, the severe penalties imposed on Internet giants by the regulatory side is undoubtedly good news. Take the case of Tencent Music as an example. Tencent Music owns more than 80% of the exclusive music library, which enables it to obtain more exclusive copyrights from copyright owners on more favourable terms, and may also be able to increase market entry barriers, and has or may have exclusions on relevant markets. Strict anti-monopoly supervision has given other smaller companies a living space and more opportunities for development.
Finally, we will broadcast the latest news. China passed the “Personal Information Protection Law of the People’s Republic of China” on August 20, 2021, and will come into force on November 1, 2021. This will further improve the personal information processing rules, and make targeted regulations on applications (App) excessive collection of personal information and other behaviours.
To understand further the impact on advertising, how to navigate the constantly shifting minefield, talk to us.
