Tencent Holdings (OTC:TCEHY) recently led a consortium of companies, including Tencent Music Entertainment (NYSE:TME), in acquiring a 10% stake of Vivendi‘s (OTC:VIVHY) Universal Music Group for $3.4 billion. Before the deal closes in the first half of 2020, Tencent Music is expected to enter a second deal to acquire a minority stake in UMG’s Chinese business. Furthermore, the deal gives the consortium the option of buying an additional stake of up to 10% in UMG by Jan. 15, 2021.Tencent Music is already the top online streaming company in China, but these deals will improve its access to UMG’s lineup of artists, which includes Taylor Swift, Lady Gaga, and The Beatles. It will also likely lower Tencent Music’s licensing fees for UMG songs, and bolster its sub-licensing business, which licenses its tracks to other Chinese streaming music platforms. This deal clearly benefits Tencent Music, but it could also hurt NetEase ( NASDAQ:NTES) Cloud Music, Alibaba‘s (NYSE:BABA) AliMusic, and other rivals in several ways.Some investors believed that the probe could derail Tencent’s Tencent’s talks with UMG, which started last summer. However, the deal was still approved — and will likely allow Tencent Music to license songs at lower royalties from UMG, then sub-license them back to rivals like NetEase and Alibaba at current rates for higher profits. To add insult to injury, Tencent Music will also reap profits from NetEase and Alibaba’s direct licensing payments to UMG.