- Alibaba to close online streaming platform Xiami Music on February 5th.
- Xiami Music only won a 2% share in China’s music streaming market.
- SAMR alleged Alibaba Group of monopolistic practices in December.
Alibaba Group Holding Limited (HKG: 9988) said on Tuesday that it plans on closing Xiami Music in February. The Chinese tech giant had acquired the music streaming platform in 2013 in a bid to expand its footprint in the entertainment industry.
Alibaba’s online music arm made the announcement via its Weibo account on Tuesday and said:
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“Due to operational adjustments, we will stop the service of Xiami Music on February 5th. It’s hard to say goodbye after being with you for 12 years.”
Alibaba shares were reported about 3.5% down in premarket trading on Tuesday and failed to recover significantly later in the day. Including the price action, the stock now has a per-share price of £21.11 after recovering from a low of £16.10 in March 2020, when the global impact of the COVID-19 crisis was at its peak.
Xiami Music has a 2% share in China’s music streaming market
Over the years, Alibaba invested millions in the music streaming platform in a bid to win a broader share in China’s online music market that Tencent Holdings currently dominates. In separate news, the New York Stock Exchange reversed its decision to delist the top three Chinese telecom companies on Tuesday.
As per TalkingData (Beijing-based data intelligence company), Alibaba’s investments in Xiami Music have gone to waste as it only managed to secure a 2% share in the country’s music streaming market in the past eight years. The online music app is still behind a number of prominent names, including NetEase Cloud Music, KuWo, QQ Music, and KuGou Music.
But an end to Xiami Music might not be the end of Alibaba’s participation in China’s music streaming market. The Hangzhou-based multinational company invested £513.61 million in NetEase Cloud Music last year. Following Xiami’s closure, Alibaba might focus on expanding its market share via NetEase Cloud Music.
SAMR alleges the e-commerce firm of monopolistic practices
Alibaba raised its share repurchase program to £7.41 billion in December. But the State Administration for Market Regulation (SAMR) launched investigation into the e-commerce company’s over alleged monopolistic practices have fuelled unease among investors and have on the company’s stock in recent weeks.
Alibaba performed slightly upbeat in the stock market last year with an annual gain of a little under 10%. At the time of writing, the Chinese multinational technology company has a market cap of £460 billion and has a price to earnings ratio of 28.88.