Tencent Music Entertainment (TME) group raised alarms over AI technology risks and was particularly concerned about possible regulatory problems brought by the Venus platform it is developing. The entity has to act accordingly while contemplating several critical odds like ethical debatable issues, innovation property problems, and the strict compliance law sanctioned by the recent Chinese measured instruments such as Deep Synthesis Provisions and the AI Conceptions. Abiding by these regulations is compulsory, otherwise, it can get fined or some problems might occur that may influence the company’s position and reputation.
Regulatory challenges and risks
Encompassing AI into Tencent Music Entertainment’s platforms, notably Venus, places it in the position of tackling new issues in the period of establishing effective regulations. The company faces a sympathetic task in which it is supposed to support the situation with the new regulations, especially the Deep Synthesis Provisions and the AIGC Measures by Chinese authorities. This way of regulation will be meant to address the questions about the ethics of AI use and secure intellectual property rights.
Major obstacles for Tencent Music Entertainment are appearing at the crossroads of the ethical problems related to the employment of AI in its goods. The company has to make sure that the AI-based tools they use are in place following strict ethical rules to preserve trust in the public and avoid vexatious accusations or violence. However, the pressure of stringent regulations should no doubt be faced considering the penalties and disruptions that could arise from a breach or disconnection of the regulation operation. A regulatory compliance failure could be hugely detrimental for TME; not only could this lead to disruptions in their operations but also tarnish their market image.
Intellectual property disputes
The association of AI in utilization also provides a basis for intellectual property disputes. Adoption of AI tools by TME would require data protection policies as a part of the TME’s overall business operations framework to prevent the infringement of the intellectual property rights of others. Intellectual property infringement could cause the company to face legal claims and financial risks, hence, TME could be at risk fiscally of the company going into an economic crisis and the prospects of the TME’s growth will be stalled.
Alongside those legal and regulatory challenges, Tencent Music Entertainment has been confronted with the problems of market or consumer acceptance of its AI –AI-enhanced goods. The development of the AI platform aggravates the complacency of issues regarding consumer attitudes and preferences. TME has to be the first to innovate bring something new to the market, and develop excellent AI offerings to remain relevant and competitive. Neglect of this element could, therefore, become a blow to the market share and be a potential competitor advantage.
Analyst consensus and stock performance
While the stock is subjected to a tough regulatory framework, the Strong Buy consensus rating of TME stock is still supported by the 14 Buy ratings and 1 Hold rating, issued by the Wall Street analysts. Analysts still predict good performances of TME for the future since it has a leading position in the market and it is quite creative with its initiatives. Nevertheless, they admit that it is now crucial for TME to deal with the problems of overall regulatory controls and maintain a good standard of compliance.
Tencent Music Entertainment encounters major obstacles surrounding the integration of AI into the products they provide, especially regarding the dynamic regulatory environments in the State. The company needs to tackle ethical issues, property rights, and compliance issues among others to ensure that it fully exploits the market opportunities and maintains its reputation. On the contrary, the analysts who are trading stocks continue to project a positive outlook on TME, a company that is constantly growing. Meanwhile, if TME has to take regulatory issues into account and succeed in producing AI products accepted by consumers, it can continue leading the market with its sustainable growth.
This article originally appeared in Tipranks
