Apple has acquired the music identification service Shazam. EU has launched an investigation into that as it is concerned that the deal could shrink consumer options for mobile music streaming services. Back in February, multiple countries including Austria, France, Iceland, and Spain requested that the European Commission take a look at the acquisition to see if it’s allowed under a EU merger law.
According to the commision, the deal “may have a significant adverse effect on competition in the European Economic Area.” The request by the commission is now being acted on and an investigation is underway with a deadline of 4th September.
Apple and Spotify both gain 1 million clicks per day through the Shazam app. If Apple decided to shut the app down to only have direct referrals to its own music service, Spotify would lose a very large amount of traffic. The officials also 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.”
It was confirmed last December by Apple that it was buying Shazam in a deal worth $400 million. Even though Shazam was valued at $1 billion during its last funding round, but it was struggling with profitability. However, it could be a boost for Apple. Its music and sound recognition is already integrated with Siri. It could gain a deeper integration with the operating system.
We will have to wait and see what the investigation brings about before we can make predictions of what it will be used for.