European Commission is investigating Apple’s proposed acquisition of Shazam

Apple’s proposed acquisition of the media identification service Shazam is now being scrutinized under the watchful eye of the European Commission, Reuters reported Monday.

Media recognition services such as Shazam permit users to identify a song based on a short audio sample by using microphones built into their mobile devices.

The Commission will conduct an in-depth antitrust investigation into the deal. European regulators are concerned that it might give the iPhone maker an unfair advantage in poaching users from its rivals, like Spotify, while reducing choice for users of music streaming services.

A statement from the European Commission confirms that the investigation into the Shazam deal is now official. “The way people listen to music has changed significantly in recent years, with more and more Europeans using music streaming services,” said EU Competition Commissioner Margarethe Vestager.

“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.”

An excerpt from the statement:

The proposed transaction 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 the music streaming service Apple Music, which in the last three years has become the second largest music streaming service provider in Europe. Shazam offers the leading music recognition app for mobile devices in the European Economic Area  and worldwide.

The Commission is wary of the possibility that Apple might gain access to commercially-sensitive data about customers of its competitors in the European Economic Area and target Spotify users. Spotify for iOS has hooks for Apple Music, iTunes and Spotify so it’s clear the Commission considers Shazam a key entry point for music streaming services.

TIP: automatically create an Apple Music playlist with your Shazamed songs

The concern is not overblown: Spotify’s 71 million paid subscribers still dwarf Apple Music’s 40 million paying customers so Apple may in fact stop referrals to Spotify from the Shazam app at any time. Apple could also remove Shazam for Android completely.

The proposed acquisition has also been scrutinized by merger regulators in other EU countries, including Austria, France, Iceland, Italy, Norway, Spain and Sweden.

Apple would like to buy Shazam for a reported $400 million, but it’s yet to comment on the deal beyond a vague statement indicating it has “exciting plans in store” for the popular service.

“Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users,” said the iPhone maker. “We have exciting plans in store and look forward to combining with Shazam upon approval of today’s agreement.”

The Commission will announce its decision on September 4, 2018.