European Commission opens investigation into Apples proposed acquisition of Shazam

The European Commission has opened an in-depth investigation to assess the proposed acquisition of Shazam by Apple under the EU Merger Regulation. The Commission is concerned that the merger could reduce choice for users of music streaming services.

The proposed transaction involves Apples acquisition of Shazam. It 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 its Apple Music streaming service, which over the last three years has become the second largest music streaming service provider in Europe. Shazam offers the globally-recognised music recognition app, which has also been deployed in TV advertising campaigns in recent year, enabling viewers to ‘Shazam’ the ad to have more information or content delivered to their mobile phone.

The announcement of the review comes two months after the Commission accepted a request from Austria, France, Iceland, Italy, Norway, Spain, and Sweden to review the acquisition as it “does not meet the turnover thresholds set by the EU Merger Regulation for mergers that must be notified to the European Commission because they have an EU dimension,” according to the Commission.

Under the EU Merger Regulation, there is a provision which allows Member States to request that the Commission assesses a merger that affects trade within the Single Market and could significantly affect competition within the territories of the requesting nations.

The Commissions initial market investigation raised several issues relating to the combination of Shazams strong market position in the music recognition apps market and Apples market position in the music streaming services market.

At this stage, the Commission said it 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. 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.

In addition, the Commission said, while at this stage it does not consider Shazam as a key entry point for music streaming services, it will also further investigate whether Apple Musics competitors would be harmed if Apple, after the transaction, were to discontinue referrals from the Shazam app to them.

The transaction was notified to the Commission on 14 March 2018. The Commission now has 90 working days, until 4 September 2018, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.

“The way people listen to music has changed significantly in recent years, with more and more Europeans using music streaming services,” said Commissioner Margrethe Vestager, who is in charge of competition policy. “Our investigation aims to ensure that music fans will continue to enjoy attractive music streaming offers and wont face less choice as a result of this proposed merger.”