The European Commission announced that, in a petition from Iceland, Spain, France, and Austria among others, it will start an investigation on how threatening could the Apple merger with Shazam be for local competitors, considering European Union’s law.
Apple will now have to submit a request to the Commission in order to approve the deal, to this the EU regulator could sign with or without extra conditions, it could also open a new investigation if larger concerns are found.
Apple Music and Spotify earn around 1 million clicks per day thanks to Shazam’s direct link and, with Apple’s buyout, it is rumored that they plan to incorporate the sound recognition system to their service and dissolve Shazam. Nevertheless, there is no official news about Shazam’s dissolution after the undisclosed purchase for around $400 million.
The European Commission’s concern comes in with Shazam’s probable shutdown, due to the fact that if this happens, Spotify could massively lose referrals, giving Apple Music some sort of monopolized privileges and leverage in the streaming race for market dominance.
Apple's deal to buy Shazam song-recognition app faces tougher antitrust scrutiny https://t.co/Xjv08KyYd2
— The Wall Street Journal (@WSJ) February 6, 2018
Why the European Commission wants to pin Apple
The European Commission is the legislative institution responsible for upholding EU treaties’ best interests in day-to-day market trades, whether they are big industry trades or small local businesses. In this case, seven members of the organ were concerned that this purchase would “threat to adversely affect competition,” especially since only acquiring the UK based Shazam could change the market drastically.
According to the European Commission, the legal basis for the investigation takes place because of Apple’s proposal to buy out Shazam does not meet “the regulations thresholds set by EU merger regulations for mergers that must be notified to the European Commission.”
Austria first submitted the referral request based on article 22, which entitles member states to request referrals to the Commission regarding thresholds or business activity that do not meet the European Community’s parameters, in the case of article 22, actions that may affect trades between EU member states or significant threats to competition within the territory of a member state.
— Reuters Business (@ReutersBiz) February 6, 2018
What is Apple’s stance on the issue?
Apple will be forced by European law to present the transaction to the European Commission since the decision was made following Austria’s request.
It is rumored and basically a fact that Apple’s purchase of Shazam has the mean of improving their live streaming music service Apple Music, so they can boost their scheduled overtake on Spotify for this summer as reported by The Wall Street Journal.
Source: European Commission