What's the situation? NetEase Cloud Music sued Tencent Music for unfair competition

Author 丨 Wang Jun

Editor 丨 Wu Liyang

Figure Source 丨 Figure worm

On April 27, NetEase Cloud Music issued a statement saying that it formally filed a lawsuit against Tencent Music Entertainment Group (including QQ Music, Kuwo Music, Kugou Music and other products) for unfair competition behavior of NetEase Cloud Music. After that, Chen Mo, head of public relations of Tencent's music brand, responded in the circle of friends that he would not join the ranks of the fight."

The two music platform giants have long been entangled, after years of dispute over copyright. On July 24 last year, the State Administration for Market Regulation ordered Tencent to remove the exclusive copyright of online music and other penalties, and on August 31, Tencent announced that it had waived its exclusive music licensing rights, saying that most of them had terminated the contract as scheduled.

Entering the post-exclusive copyright era, both music platforms need to explore new business models. In the statement of NetEase Cloud Music, tencent music group was accused of malicious copyright infringement and long-term plagiarism of netease cloud music's visual design, product functions, and innovative mechanisms.

However, it remains to be seen how the online unfair competition disputes are increasing, and it is more difficult to determine the facts and apply the law, so it remains to be seen how the incident will develop subsequently.

Batch washing of songs disrupts the order of market competition

NetEase Cloud Music said that for a long time, Tencent Music Entertainment Group has infringed on NetEase Cloud music copyright through illegal piracy and illegal release of unauthorized songs, batch impersonation of songs, follow-up plagiarism of NetEase Cloud music product innovation, evasion and even confrontation of supervision, and constituted an act of unfair competition.

Professor Yu Zuo, director of the Research Center for Industrial Organization and Enterprise Organization of Dongbei University of Finance and Economics, believes that if the evidence of NetEase Cloud Music is conclusive, the "sub-regional" broadcasting of NetEase works and the introduction of external song lists to smuggle NetEase works mentioned in the statement disrupt the order of market competition and damage the legitimate rights and interests of NetEase Cloud Music, which belongs to the situation stipulated in Article 1 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application, that is, "violating Chapter II of the Anti-Unfair Competition Law and the Patent Law, trademark law, In circumstances other than those provided for in the Copyright Law, the people's court may apply Article 2 of the Anti-Unfair Competition Law to make a determination."

He pointed out that if there is indeed evidence, Tencent Music's batch washing of unauthorized popular songs is suspected of plagiarizing NetEase Cloud music works and "high imitation" netEase Cloud music singers, suspected of violating article 3 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application and Article 2 of the Anti-Unfair Competition Law, and article 11 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application: Business operators use enterprise names (including abbreviations, trade names, etc.) that have a certain influence on others without authorization, and also apply Article 11 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of The Supreme People's Court: Business operators use enterprise names (including abbreviations, trade names, etc.) that have a certain influence with others without authorization. Similar identifiers such as the name of the social organization (including abbreviations, etc.), name (including pen name, stage name, translated name, etc.), the main part of the domain name, the name of the website, the web page, and so forth, lead people to mistakenly believe that it is another person's product or have a specific connection with others.

For example, Yu Zuo said that if after the name of a "high imitation" song is marked, the inattentive listener mistakenly thinks that it is the song they want to listen to, the act of clicking on the song will occur. This may bring traffic to platforms that imitate songs.

"The competition between digital platforms is very much traffic competition. If Tencent Music implements batch washing of unlicensed popular songs to disrupt the market competition order and harm the legitimate rights and interests of NetEase Cloud Music, it is a violation of Article 2 of the Anti-Unfair Competition Law. ”

In addition, NetEase said in the statement that QQ Music, Kugou Music, and Kuwo Music copied the design of netEase Cloud Music Vinyl Turntable; Kugou Music and QQ Music copied netEase Cloud Music's "Listen Together" function; Kugou Music copied NetEase Cloud Music's "Yunbei Push Song" function settings and interface design.

Source: NetEase Statement

However, according to media reports, Chen Mo's response also listed NetEase's infringements. It said that after the expiration of the copyright of singer Jay Chou's music, NetEase Cloud Music was still suspected of illegally packaging and selling Jay Chou's entire music library to the public, and after a one-and-a-half-year trial, it was found to be infringing, forfeiting income and compensating related losses. Moreover, the NetEase cloud music platform can still search for different forms of copycat version of popular songs. Take the recent hit song "All the Way to The Flower" as an example, this song is sung by Kugou's co-musician Wen Yixin, and the number of listeners on the platform has exceeded 100 million, Chen Mo's circle of friends shows that the NetEase cloud music platform can search for multiple copycat versions, suspected of serious infringement.

As for the problem that the product functions mentioned by NetEase Cloud Music are plagiarized. Chen Mo's circle of friends shows that Tencent Music's related product development time and patent application time are earlier than NetEase Cloud Music, and new features such as "seamless playback" recently developed and launched by QQ Music have also been quickly followed by NetEase Cloud Music.

In recent years, online unfair competition disputes have been increasing, it is more difficult to determine facts and apply laws, and new requirements have been put forward for the judiciary such as the boundaries of rights and the determination of responsibilities in new fields and new formats.

Just on March 17, 2022, the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People's Republic of China further clarified and refined the acts of unfair competition of social concern, such as commercial defamation and online unfair competition.

Next, it remains to be seen how NetEase Cloud Music's lawsuit against Tencent Music will go.

Long-entangled "one super one strong"

In fact, the contradiction and dispute between NetEase Cloud Music and Tencent Music Group did not appear only now, and the previous focus was on copyright issues.

From 2014 to 2017, the two sides repeatedly went to court over music copyright infringement.

After the promulgation of the strictest copyright order in 2015, in the copyright competition opened by various companies, platforms such as Shrimp Music gradually fell out of the competition sequence. Tencent Music has become bigger and stronger with rich copyright resources, and NetEase Cloud Music has explored the small and beautiful route, gradually forming a situation of "one super and one strong".

In September 2017, the National Copyright Administration called on online music platforms to avoid snatching exclusive copyright by inflating copyright fees, actively promote the wide dissemination of online music, and promote the sub-licensing of online music works. In February 2018, under the official coordination, Tencent Music and NetEase Cloud Music reached an agreement on online music copyright cooperation and mutually licensed music works, reaching more than 99% of the number of their own exclusive music works.

However, since then, the two music platforms have still "gone off the gun" due to copyright issues. On April 5, 2018, Tencent Music Entertainment Group issued a statement saying that NetEase Cloud Music infringed, due to the repeated infringement and use beyond the scope of authorization during the cooperation between NetEase Cloud Music and Tencent Music in relation to the copyright sub-authorization of Jewell Music, after the expiration of the netease cloud copyright sub-authorization on March 31, 2018, tencent music as the copyright agent and Jewell reached a consensus, suspended the sub-authorization cooperation negotiation with NetEase Cloud Music, and required NetEase Cloud to make rectification before resuming the sub-authorization negotiation.

In January 2021, the State Administration for Market Regulation opened an investigation into Tencent Holdings Co., Ltd.'s acquisition of the equity of China Music Group in July 2016 on suspicion of illegally implementing business concentration, and finally ordered Tencent and its affiliates to take measures to restore market competition by removing exclusive music copyrights within 30 days, stopping the payment of copyright fees such as high advance payments, and not requiring upstream copyright owners to give them conditions that are superior to competitors without legitimate reasons. NetEase Cloud Music also responded to the policy and canceled the display of exclusive logos.

This is also seen as the online music market entering the post-exclusive copyright era. After the exclusive copyright break, the music platform outside the "one super and one strong" recovered. The Shrimp Music Player, which officially ceased service as early as February 2021, was finally officially "resurrected" by Ali Music on September 24 of the same year. Damai announced the establishment of the Shrimp Music Entertainment Content Label, and planned a number of performances in the form of the Shrimp Rice Chamber Music Festival during the National Day. ByteDance also seems to be sharing the cake with the existing streaming music market through the distribution advantages of short video platforms. In July 2021, ByteDance has begun testing a new music agency distribution platform, Galaxy Ark, which focuses on uploading songs and videos at one stop and easily listing on global platforms.

For the two frontrunners of Tencent Music and NetEase Cloud Music, how to lay out the next move, keep the stock, and compete for increments is particularly important. The subsequent healthy development of digital music platforms also requires the efforts of all parties.

Editor of this issue Wang Tingting Intern Li Kailin