EU Halts Apple-Shazam Merger, Launches Antitrust Investigation

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The European Commission has opened an antitrust investigation into Apple’s acquisition of Shazam, putting the deal on hold and delaying it for at least four months.

Europe’s head antitrust regulator said in a statement that “the Commission is concerned that the merger could reduce choice for users of music streaming services.” It went on to add that the acquisition would combine two “significant” players in the industry.

In February, a handful of European countries called on the EU to carry out a regulatory investigation of the deal. Now, it seems that EU officials are officially acting on those requests.

One of the main issues appears to be how the music identification platform refers users to streaming services. Spotify and Apple Music get about 1 million clicks a day through Shazam — if Apple were to cut support for Spotify, the third-party service could lose a huge chunk of its traffic.

Additionally, European regulators are worried that Apple could leverage Shazam and its data to specifically target users of Spotify and other competitors and “encourage them to switch to Apple Music.” In other words, “competing music streaming services could be put at a competitive disadvantage,” the commission said in a statement.

“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,” EU Commissioner Margrethe Vestager said in a statement.

Apple announced that it was buying Shazam in December. Neither company has confirmed how much the deal cost, but TechCrunch reported at the time that it was around $400 million.

In the wake of that announcement, Shazam said it couldn’t imagine a “better home” for its platform than Apple. For its part, Apple said the two firms “share a passion for music discovery,” and added that the companies had “exciting plans” for the future.

Shazam could obviously boost Apple Music in a number of ways. But before the deal is approved, it seems that European regulators have to determine whether that could represent an unfair advantage for the Cupertino tech giant’s platform.

The European Commission has set an investigatory deadline of Sept. 4, 2018. It can decide to approve the acquisition, apply conditions to the deal, or block it entirely.

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