The EU has launched an investigation into Apple’s acquisition of music identification service Shazam. It’s concerned that the deal could shrink consumer options for mobile music streaming services within the EEA (European Economic Area).
In February, multiple countries, including Austria, France, Iceland, and Spain, requested that the European Commission assess the acquisition to determine whether it’s allowed under a European Union merger law. The deal, according to the commission, “may have a significant adverse effect on competition in the European Economic Area.” That request is now being acted on, with an investigation deadline set of September 4th.
The primary worry appears to be that Spotify and Apple currently gain 1 million clicks per day through the Shazam app. While Shazam is still live, if Apple were to shut it down or only direct referrals to its own music service, Spotify could lose a significant amount of traffic. Additionally, officials point out that Apple could use Shazam’s data to unfairly target its rivals’ users and “encourage them to switch to Apple Music.”
EU competition commissioner Margrethe Vestager said in a statement: “The way people listen to music has changed significantly in recent years, with more and more Europeans using music streaming services. Our investigation aims to ensure that music fans will continue to enjoy attractive music streaming offers and won’t face less choice as a result of this proposed merger.”
Apple confirmed it was buying Shazam in a deal worth $400 million last December. That number is far from the $1 billion Shazam was valued at during its last funding round, but the company was struggling with profitability, only bringing in $54 million in revenue during 2016. Shazam can be a boon to Apple in several ways. Its music and sound recognition is already integrated with Siri, and it could gain a deeper integration with iOS. Apple could also leverage Shazam’s visual recognition tech for its ARKit efforts.