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European Regulators Say They'll Investigate Whether Apple's Shazam Buy Could Unfairly Hurt Spotify

European Regulators Say They'll Investigate Whether Apple's Shazam Buy Could Unfairly Hurt Spotify

By Hayley Tsukayama, The Washington Post | Updated: 24 April 2018 10:16 IST

European regulators said Monday that they're deepening their probe into Apple's acquisition of the music recognition app Shazam over concerns that the deal could limit people's streaming music choices and unfairly weaken companies such as Spotify.

Shazam, which is based Great Britain, lets people use their smartphone microphones to identify songs playing over loudspeakers, television or the radio within seconds. Currently, the app will identify a song and then refer people to a streaming music service such as Spotify, Deezer or Apple Music to purchase it.

Regulators in Europe say they worry the acquisition could give Apple an unfair advantage if it used Shazam "to directly target its competitors' customers and encourage them to switch to Apple Music." An in-depth investigation, they say, will also examine how much of an advantage Apple would receive if it became the only music service to receive referrals from Shazam.

"The way people listen to music has changed significantly in recent years, with more and more Europeans using music streaming services," according to a statement by Margrethe Vestager, commissioner in charge of competition policy. "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 filed for approval of the deal in Europe on March 15. Ahead of that filing, seven countries asked the European Commission to review the deal for possible repercussions for the music industry including Sweden - home to Spotify - and France, where Paris-based Deezer is headquartered.

Apple announced it would buy Shazam in December, with various news outlets pegging the price at $400 million (roughly Rs. 2,650 crores). Analysts say the acquisition is part of Apple's renewed push into the music world, giving the company the technology to find what songs people are looking up the most and to create a close relationship with the 1 billion people who have downloaded Shazam's app.

The European Commission said that it will publish its conclusion about the acquisition by September 4. Apple did not respond to a request for comment.

Apple revolutionised the digital music with iTunes in the early 2000s, but fell behind as people opted to buy access to music through streaming services rather than purchasing their own tracks and albums on iTunes.

Apple launched its own streaming service called Apple Music in 2015, which has grown quickly. Analysts say it is poised to overtake Spotify as the market leader in the US within a year. Apple Music has approximately 15 million users in the United States, as compared to Spotify's 18.2 million. (Internationally Spotify's number of active users is roughly double that of Apple's.)

Apple Music is also a key component in the marketing of the HomePod smart speaker, which relies on Apple Music as its sole music service.

Shazam is also valuable to Apple for reasons apart from music. The company has developed a "visual Shazam" augmented reality service, which can identify posters, ads and other products. Apple has invested deeply into adding augmented reality capabilities to the iPhone and other products.

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