The EU has launched a formal investigation into Apple’s proposed acquisition of UK music-recognition app Shazam.
The European commission announced its in-depth investigation into the deal over concerns that it would harm consumer choice and give Apple an unfair advantage through access to user data, which could aid in poaching customers from rivals.
Shazam has been downloaded 1bn times and is used 20m times a day. It is the world’s leading music recognition system, able to listen to and identify tracks via a smartphone and then link those tracks to multiple music subscription services, which means it could therefore hold commercially sensitive data on Apple’s competitors and their consumers.
Noting that Apple Music has become the second-largest music streaming service in Europe, the EC said: “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 EC will also investigate whether it would have a material affect on competitors, if Apple were to discontinue referral from Shazam to the likes of Spotify and Dezer.
A deal between Apple and Shazam, reportedly worth £300m, was confirmed in December as a move to help the iPhone-maker better compete with market-leader Spotify. The EC launched a preliminary review of the takeover in February following a request from seven European countries including France, Italy, Spain and Sweden. Regulators will now have until 4 September to decide whether to permit the takeover.
Competition commissioner Margrethe Vestager said: “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 is locked in a battle on multiple fronts within the music streaming business. It was late to the game, allowing Swedish rival Spotify to build a commanding position. Spotify has 71 million paying subscribers and a popular free, ad-supported tier.
Apple Music had 38 million paying subscribers in March and the Shazam deal would also boost Apple’s ability to compete with Google’s voice-assistant services. Google Assistant already has a music-recognition system baked in, where Apple’s Siri does not, which has led to it being perceived by users as a distant third in capability behind Google’s offering and Amazon’s Alexa.
