Tencent Music Entertainment‘s acquisition of Chinese audiobooks and podcasting platform Ximalaya has cleared China’s competition watchdog.
China’s State Administration for Market Regulation (SAMR) issued an announcement on Tuesday (May 12) granting conditional approval to the USD $2.4 billion cash-and-stock deal, nearly a year after Tencent Music first unveiled the transaction in a June 2025 SEC filing.
The clearance paves the way for the deal to close – and with it, a potential cash-out for Sony Music Entertainment, one of Ximalaya‘s shareholders. (According to an SEC filing reviewed by MBW, Sony Music acquired 4.6 million Series E-2 preferred shares in Ximalaya for a consideration of $50 million in 2020.)
Tencent Music – the operator of QQ Music, Kugou Music, and Kuwo Music – will absorb Ximalaya as a wholly-owned subsidiary once the deal closes.
SAMR granted the approval subject to five binding commitments:
- According to the regulator’s announcement, the combined company must not raise service prices on Ximalaya‘s platform, lower service standards, or impose “unreasonable trading conditions”.
- The parties must maintain the current proportion of free content and free popular content available to users.
- The companies are prohibited from entering new exclusive licensing agreements with rights holders for online audio content – and must terminate existing exclusive licensing arrangements within “the prescribed timeframe”, per SAMR.
- Tencent Music and Ximalaya cannot bundle audio or music streaming services for carmakers, or “obstruct or restrict” automakers from buying rival products.
- The combined entity is also barred from restricting Ximalaya‘s podcasters and audio creators from joining other platforms or distributing their copyrighted works elsewhere.
SAMR said the case “holds important significance for maintaining the order of fair competition in China’s domestic online audio playback platform market and online music playback platform market, preventing ‘involution-style’ competition in the platform sector, and promoting innovation and healthy development of the platform economy”.
The regulator added that it would “strictly supervise” the transaction parties’ fulfillment of the restrictive commitments.
In a statement on Tuesday, Tencent said it would “strictly comply” with the SAMR ruling and “earnestly fulfill all commitments, and ensure the transaction proceeds in accordance with laws and regulations”.
The fresh conditions echo an earlier round of action by SAMR against Tencent Music.
In July 2021, the regulator fined TME 500,000 yuan (USD $77,000) and gave the company a 30-day deadline to give up its exclusive licensing deals with Universal Music Group, Sony Music Entertainment, and Warner Music Group in China.
Those 2021 exclusivity restrictions applied to recorded music. The new conditions extend similar restrictions to the broader online audio category, including audiobooks and podcasts.
Tencent Music‘s takeover of Ximalaya was outlined in an SEC filing dated June 10, 2025.
Under the transaction, Ximalaya shareholders will receive $1.26 billion in cash, plus Tencent Music Class A ordinary shares representing up to 5.2% of the company’s total outstanding shares. Ximalaya’s founding shareholders are also eligible for additional shares worth up to 0.37% of TME’s total share count, tied to performance.
Ximalaya‘s other shareholders included Tencent Music‘s majority-parent company Tencent Holdings, and Chinese search giant Baidu.
The SAMR approval landed on the same day as Tencent Music‘s Q1 2026 earnings release. The company reported quarterly revenues of RMB 7.90 billion (USD $1.15 billion), up 7.3% YoY, with music-related services revenue up 12.2% YoY to RMB 6.51 billion (USD $944 million).
According to a listing application filed by the company in 2024, Ximalaya reported 303 million monthly active users as of 2023.
The audio platform pursued IPOs multiple times between 2021 and 2024, including filings in the US and Hong Kong, all of which were withdrawn or shelved.
Tencent Music Executive Chairman Cussion Pang told investors on the company’s Q2 2025 earnings call: “The reason why we [have pursued] the Ximalaya deal is because, for the management team and for the whole company, we always believe in the value of long-form audio.”
Pang added: “Long-form audio is a very important content form. To us, it’s already played a complementary role to our existing music business.”
SAMR’s announcement and Tencent’s corporate response were originally published in Chinese. Quoted passages are translated via MBW.Music Business Worldwide
