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
Tencent Music Entertainment’s acquisition of Ximalaya, a prominent Chinese audiobook and podcasting platform, has received conditional approval from China’s State Administration for Market Regulation (SAMR). This approval marks a significant milestone in the $2.4 billion cash-and-stock deal that Tencent Music initially announced in a June 2025 SEC filing. The transaction is expected to be finalized, allowing Tencent Music to integrate Ximalaya as a wholly-owned subsidiary, which may also provide a cash-out opportunity for Sony Music Entertainment, a previous shareholder in Ximalaya.
The SAMR’s approval comes with five binding commitments aimed at ensuring fair competition in the online audio and music markets in China. These commitments include:
1. The combined entity is prohibited from increasing service prices on Ximalaya’s platform or lowering service quality.
2. The companies must maintain the current levels of free content available to users.
3. They are barred from entering into new exclusive licensing agreements with audio content rights holders and must terminate existing exclusive arrangements within a specified timeframe.
4. The companies cannot bundle their audio streaming services with car manufacturers or restrict automakers from opting for competing products.
5. Ximalaya must not impose restrictions on its podcasters and audio creators regarding their ability to join other platforms or distribute their works elsewhere.
SAMR emphasized the importance of this case in maintaining fair competition and fostering innovation within China’s online audio sector. The regulator indicated it would closely monitor the compliance of Tencent Music and Ximalaya with these commitments.
In response to the SAMR ruling, Tencent expressed its intention to comply with all regulatory requirements and uphold its commitments. This recent approval follows previous scrutiny of Tencent Music, which faced a fine in July 2021 for its exclusive licensing deals with major music labels like Universal Music Group, Sony Music, and Warner Music Group. The new conditions extend similar restrictions to the broader online audio landscape, affecting audiobooks and podcasts as well.
The acquisition deal involves Ximalaya’s shareholders receiving $1.26 billion in cash and Tencent Music Class A shares, which represent up to 5.2% of the company’s total outstanding shares. Additionally, Ximalaya’s founding shareholders could earn more shares based on performance metrics. Tencent Music’s majority-parent company, Tencent Holdings, and Baidu are among Ximalaya’s other shareholders.
The SAMR’s approval coincided with Tencent Music’s Q1 2026 earnings announcement, where the company reported a revenue increase of 7.3% year-over-year, totaling RMB 7.90 billion (approximately $1.15 billion). Revenue from music-related services rose by 12.2% year-over-year, amounting to RMB 6.51 billion ($944 million). Ximalaya, which reported 303 million monthly active users as of 2023, has attempted to pursue initial public offerings (IPOs) in both the U.S. and Hong Kong between 2021 and 2024, but these efforts have not yet materialized.
Tencent Music’s Executive Chairman, Cussion Pang, highlighted the strategic importance of the Ximalaya acquisition during the company’s Q2 2025 earnings call. He explained that the management team believes in the value of long-form audio, considering it an essential complement to their existing music business. This acquisition is expected to strengthen Tencent Music’s position in the audio market and enhance its content offerings.
Overall, the acquisition of Ximalaya by Tencent Music is a pivotal move in the evolving landscape of online audio consumption in China, with regulatory oversight aimed at promoting fair competition and preventing monopolistic practices. The successful integration of Ximalaya into Tencent Music may lead to further innovations and developments in the audio streaming sector, benefiting both companies and their users.
