China’s State Administration for Market Regulation (SAMR) has conditionally approved Tencent Music Entertainment Group’s acquisition of Ximalaya, one of the country’s leading online-audio platforms, after concluding that the deal could restrict competition in China’s online-audio playback and online-music playback markets. The regulator dated the decision May 11, 2026, and published it a day later. Tencent disclosed the transaction in June 2025, saying that Ximalaya would become its wholly owned subsidiary upon closing.
SAMR imposed five binding remedies on Tencent, Ximalaya and the merged entity. Without a justified reason, the companies may not raise prices for online-audio playback services, reduce service levels or impose unreasonable trading conditions. They may also not reduce the share of free content or popular free content on the platform.
The centrepiece of the remedy package targets copyright licensing. SAMR barred the merged company from entering into exclusive licensing agreements with online-audio copyright owners and ordered it to unwind existing exclusive arrangements within a prescribed period. The regulator also said the company may not restrict hosts or creators from joining multiple online-audio platforms or distributing works they own across multiple services.
SAMR further restricted how the combined company can deal with automakers. Without a justified reason, it may not bundle online-audio playback platforms or online-music playback platforms to car manufacturers, nor may it obstruct or restrict automakers from purchasing rival products. The regulator said those safeguards were necessary because music and long-form audio are both important parts of smart in-vehicle entertainment systems, giving the merged company a potential channel to foreclose competitors.
In its competitive analysis, SAMR said Ximalaya held a 40 percent to 50 percent share of China’s online-audio playback platform market in 2024, while Tencent held 0 percent to 10 percent, giving the merged entity a combined 45 percent to 55 percent share. The regulator said the market’s Herfindahl-Hirschman Index would rise from 2,811 before the transaction to 3,529 afterwards, an increase of 718 points in a market it already viewed as highly concentrated. SAMR identified Tencent, Tomato Changting and NetEase Cloud Music as Ximalaya’s closest competitors and said the transaction would reduce the number of close competitors from four to three.
SAMR’s review also examined adjacent competition issues beyond the direct overlap in online audio. The regulator said Tencent already has a strong presence in China’s online-music playback market and that the combined company would rank near the top in both online music and online audio, with rich content resources, large user bases and strong network effects. In SAMR’s view, that could give the merged entity both the ability and the incentive to tie those services together in emerging smart-car channels, increasing rivals’ costs of reaching automakers and reducing consumer choice.
Tencent announced the acquisition on June 10, 2025. In its Hong Kong exchange filing, the company said it would pay an aggregate of US$1.26 billion in cash, plus Class A ordinary shares equal to no more than 5.1986 percent of its total outstanding ordinary shares shortly before closing, plus additional Class A shares of no more than 0.37 percent for founder shareholders under the merger terms. Reuters described the transaction at the time of announcement as worth about US$2.4 billion, based on the cash-and-stock structure.
Ximalaya’s recent financial history helps explain the significance of the deal. According to reporting based on the company’s 2024 Hong Kong IPO filing, Ximalaya recorded revenue of 5.857 billion yuan in 2021, 6.061 billion yuan in 2022 and 6.163 billion yuan in 2023. It reported adjusted net profit of 224 million yuan in 2023, after adjusted losses in the prior two years. The same reporting said Ximalaya had previously filed for a U.S. listing in May 2021, then sought a Hong Kong listing in September 2021, updated the filing in March 2022, and filed again in April 2024.
SAMR said part of its concern was that Ximalaya had already secured some high-quality exclusive audio rights before the transaction, and that the merger could strengthen the combined group’s bargaining power with upstream copyright owners. That, the regulator said, could increase entry barriers if the company were able to demand broader exclusivity. Earlier reporting from China Daily in 2017 said Ximalaya held audio copyrights to 70 percent of current bestsellers and had signed strategic cooperation agreements with publishers including CITIC Press and China South Publishing & Media Group for audio versions of popular books.
The ruling is also consistent with SAMR’s earlier antitrust stance on exclusive copyright licensing in digital media. In July 2021, the regulator ordered Tencent and its affiliates to relinquish exclusive music rights within 30 days in connection with Tencent’s earlier China Music transaction and fined the company Rmb500,000 (US$73,600). SAMR said at the time that Tencent controlled more than 80 percent of exclusive music library resources after that deal, which could raise entry barriers and restrict competition.
The Ximalaya review lasted nearly a year. SAMR said it received the filing on June 11, 2025, accepted a complete filing on September 3, moved the case into further review on September 30, extended that review on December 26, suspended the review clock on February 12, 2026, and resumed it on May 11. The regulator said its investigation included consultations with government departments, industry associations and competitors, questionnaire surveys, and economic analysis by an independent third-party institution.
- Cathy Li
