Music streaming service Spotify has abandoned its bid to takeover rival platform SoundCloud after months of talks, TechCrunch reports, citing a source familiar with the discussions.
In September, the Financial Times reported the two European firms were in advanced talks over an acquisition. TechCrunch now reports that the discussions ended because Spotify feared the deal would have a negative impact as it moves towards an initial public offering (IPO).
Numerous media reports have suggested that Spotify is poised to float next year though the company has not officially confirmed this.
"It doesn't need an additional licensing headache in a potential IPO year," the TechCrunch source said, explaining why Spotify walked away from SoundCloud.
Spotify and SoundCloud declined to comment when contacted by CNBC.
SoundCloud stepped up its challenge to Spotify earlier this year when it expanded its own subscription music streaming service to the U.K. and Ireland. Eight-year-old SoundCloud allows people to upload tracks. It's best-known as a place to find emerging artists, DJ sessions and song remixes.
And Spotify is also facing competition from others, most notably Apple Music, which announced earlier this week that it now has 20 million paying subscribers. This is still behind Spotify's 40 million paid subscribers.
Read the full TechCrunch report here.