The European Commission has announced an in-depth investigation into Apple's proposed $400 million acquisition of popular music recognition app Shazam. The EU regulatory body is concerned that the merger could reduce choice for users of music streaming services and Apple would obtain access to commercially sensitive data.
"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," Commissioner Margrethe Vestager, in charge of competition policy, said in a statement late on Monday. The Commission now has time till September 4 to take a decision.
Built by Shazam Entertainment Ltd, a British app development company, Shazam is used by hundreds of millions of people each month to instantly identify music that's playing and see what others are discovering. According to the European Commission, Apple's acquisition of Shazam would combine two significant and well-known players in the digital music industry that are mainly active in complementary business areas.
"In particular, Apple offers the music streaming service 'Apple Music', which in the last three years has become the second largest music streaming service provider in Europe. "Shazam offers the leading music recognition app for mobile devices in the European Economic Area (EEA) and worldwide," said the statement.
The Commission's initial market investigation raised several issues relating to the combination of Shazam's strong market position in the music recognition apps market and Apple's market position in the music streaming services market. "At this stage, the Commission is concerned that, following the takeover of Shazam, Apple would obtain access to commercially sensitive data about customers of its competitors for the provision of music streaming services in the EEA," the statement added.
Access to such data could allow Apple to directly target its competitors' customers and encourage them to switch to Apple Music. "As a result, competing music streaming services could be put at a competitive disadvantage," the European Commission said.
Basically, Shazam recognises music. People use the app to capture a clip of music that is playing. The clip is then matched with the large database to return the best result. Shazam, that reports over one billion downloads, also lets users identify any TV show, film or advert in a jiffy, by listening to an audio clip or a visual fragment.
In February, the Commission accepted a request from Austria, France, Iceland, Italy, Norway, Spain and Sweden to assess the acquisition of Shazam by Apple under the EU Merger Regulation.