Back in December, we heard that Apple was buying Shazam, and now the EU is looking into the takeover of Shazam. The European Commission has announced that it will be examining whether the acquisition would reduce choice for people who use music streaming services.
Impact on Music Streaming Services
Both Apple Music and Spotify receive about 1 million clicks a day each from Shazam. This significant traffic could be jeopardized for Spotify after the acquisition if Apple decides to shut down Shazam or limit its functionality to favor Apple Music. Shazam, a popular music recognition app, has been a crucial tool for users to discover new music and seamlessly transition to streaming platforms like Spotify and Apple Music. The potential for Apple to leverage Shazam’s user base exclusively for its own streaming service raises concerns about market competition and consumer choice.
Commissioner Margrethe Vestager, in charge of competition policy, 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.”
Potential Outcomes of the Investigation
The European Commission’s investigation will delve into various aspects of the acquisition, including how it might affect competition in the music streaming market. If the Commission finds that the deal could harm consumers by reducing their choices or increasing prices, it has the authority to block the merger. This would not be the first time the EU has intervened in major tech acquisitions to protect consumer interests and maintain market competition.
For instance, in 2017, the EU fined Google €2.42 billion for abusing its market dominance as a search engine by giving an illegal advantage to its own comparison shopping service. Similarly, the EU’s scrutiny of the Apple-Shazam deal underscores its commitment to preventing monopolistic practices that could stifle innovation and limit consumer options.
Moreover, the investigation will consider the broader implications for the music industry. Shazam’s data on user preferences and listening habits is a valuable asset that could give Apple a competitive edge. By integrating this data with Apple Music, Apple could potentially offer more personalized recommendations and exclusive content, further enticing users to switch from rival services like Spotify.
It will be interesting to see what happens. If the EU Commission decides that the deal is bad news for consumers, then the takeover could be blocked. This would be a significant setback for Apple, which has been aggressively expanding its services division to reduce its reliance on hardware sales. On the other hand, if the acquisition is approved, it could reshape the landscape of the music streaming industry, prompting other companies to explore similar strategic moves.
The EU’s investigation into Apple’s acquisition of Shazam highlights the complexities and potential ramifications of mergers in the tech industry. As music streaming continues to grow in popularity, ensuring a competitive market that benefits consumers remains a top priority for regulators. The outcome of this investigation will not only impact Apple and Shazam but also set a precedent for future tech acquisitions.
Source EU
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