According to TechCrunch, though months of talks took place, Spotify ultimately decided not to purchase SoundCloud because of worries the acquisition would negatively impact its impending IPO.
SoundCloud, which allows users to upload, promote, and share audio recordings, would have allowed Spotify to add user-created content to its own music catalog, but Spotify would have needed to deal with licensing issues, something it did not want to do ahead of an IPO.Spotify hasn't officially said it will go public in 2017, but there has been plenty of speculation, including a funding round with incentives tied to a listing. The source said Spotify went cold on SoundCloud because "it doesn't need an additional licensing headache in a potential IPO year."
SoundCloud has upwards of 175 million total listeners a month, while Spotify has 40 million paying subscribers. Apple Music, Spotify's main competitor, has been gaining subscribers steadily and as of December 2016, boasts 20 million subscribers.
Article Link: Spotify Won't Be Purchasing SoundCloud After All