NetEase Cloud Music sues rival Tencent Music over ‘unfair competition’ claims

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December 12, 2018: The New York Stock Exchange is decorated for the first day of trading for Tencent Music Entertainment.

NetEase Cloud Music, the music streaming service owned by Chinese tech giant NetEase, is suing rival Tencent Music Entertainment.

That’s according to Reuters, which reports that NetEase’s legal action alleges “unfair competition”, including copying elements of its app’s design by TME’s music services including Kuwo Music and Kugou Music.

Tencent Music also runs music apps in China including its flagship music platform, QQ Music, plus online karaoke service, WeSing.

Reuters also reports that “features of TME’s suite of music streaming apps allowed its users to sidestep copyright protection and play songs licensed by NetEase Cloud Music”.

Pandaily, meanwhile, cites a NetEase Cloud Music statement that accuses TME of playing “unauthorised” songs on its music-streaming platforms ‘repeatedly’.

Also reported by Pandaily, NetEase Cloud Music’s statement claims that TME’s QQ Music, Kugou Music copied its friend-inviting function, and QQ Music and Kugou Music of ripping off an in-app turntable playback design.

The news of the legal action against Tencent Music Entertainment comes at a time when competition is hotting up in the music streaming sector in China.

Nine months ago, TME and and its majority-owner Tencent Holdings were ordered to relinquish exclusive deals held with global labels in China after TME was investigated, in 2019, for striking exclusive licensing deals with the three major record companies in the territory.

TME previously struck deals with Universal MusicSony Music and Warner Music that enabled it to license the majors’ music for its own platforms, but also to exclusively sub-license these catalogs to local rivals.

The platform’s latest licensing agreements with Universal and Warner no longer possesses exclusive sub-licensing rights, allowing these companies to also strike separate direct deals with TME’s biggest rival in China, NetEase Cloud Music.

NetEase inked licensing deals with Warner Chappell Music in May 2020, UMG in August 2020 and then Sony Music Entertainment in May last year.

Meanwhile, another new streaming service was launched in China by TikTok’s parent company ByteDance last month.

In a [translated] statement issued by NetEase Cloud Music on its Weibo account today (April 27), NetEase Cloud Music urges TME “to immediately rectify its products and businesses and stop all unfair competition behavior[s]”.

NetEase also calls for its rival to “immediately stop infringing acts, including but not limited to removing infringing works, stopping impersonation and washing songs, and rectifying related infringing functions”.

It also demands that TME “Immediately stop unscrupulous unfair competition and conduct healthy competition from the perspective of enhancing content creation and user experience”.

NetEase Cloud Music ended 2021 with 182.6 million MAUs, up from 180.5 million in 2020. The service also had 28.9 million monthly paying users at the end of 20121, up from 16 million for the same period of 2020.

Tencent Music, meanwhile, reached 76.2 million paying users in Q4 (ended December 31, 2021), up by 36.1% year-over-year.

NetEase‘s subsidiary Cloud Village – which operates the NetEase Cloud Music music streaming service – listed on the Hong Kong Stock Exchange in December.Music Business Worldwide

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