In December of 2017, Apple announced its plans to purchase Shazam, the long-running, ultra-popular music recognition company, for a sum of roughly $400M. Since then, the plans have been tied up by a European Union merger-law investigation. Now, the E.U. commision investigating the company’s sale has determined that the deal does, in fact, comply with legal standards.

Immediately after the proposed sale of Shazam was announced late last year, several European countries with skin in the music streaming game, including France, Spain, and Austria, filed motions for an official review of the sale. They argued that the deal would be detrimental to fair economic market competition for other European streaming companies like Spotify, based in Sweden.

Competitors’ fears are understandable. Apple has been making headway into the streaming space with Apple Music in recent years and aims to greatly increase their market share in the near future with new streaming-minded hardware and software developments. Their acquisition of Shazam’s song recognition tech could conceivably result in them directing all users exclusively to their platform and cutting other services out. It would also likely be integrated into Apple’s platform natively, giving them a significant leg up.

But perhaps most significantly, the sale would give Apple access to Shazam’s massive, two-decade-long cache of user data, giving them unprecedented insight into music tastes and listening habits. According to Rolling Stone, “Shazam, which launched in 1999 and over the years grew into a household name, says it has more than 120-million monthly active users who’ve collectively downloaded the app more than 1 billion times and used it to identify 15 billion songs.”

Following months of investigation, the European Commission has decided that the deal is kosher. According to a statement from Commission head Margrethe Vestager, “After thoroughly analyzing Shazam’s user and music data, we found that their acquisition by Apple would not reduce competition in the digital music streaming market,” citing, among other points, that “access to Shazam’s data would not materially increase Apple’s ability to target music enthusiasts and any conduct aimed at making customers switch would only have a negligible impact.”

With the commission’s ruling, the $400M sale of Shazan to Apple will go through as planned, and you can surely expect some big upgrades to Apple’s music streaming services as a result. You can read the commission’s full statement below.

The Commission’s investigation

Apple and Shazam mainly offer complementary services and do not compete with each other. The Commission opened an in-depth investigation to assess:

  • whether Apple would obtain access to commercially sensitive data about customers of its competitors for the provision of music streaming services in the EEA, and whether such data could allow Apple to directly target its competitors’ customers and encourage them to switch to Apple Music. As a result, competing music streaming services could have been put at a competitive disadvantage.
  • considering Shazam’s strong position in the market for music recognition apps, whether Apple Music’s competitors would be harmed if Apple, after the transaction, were to discontinue referrals from the Shazam app to them.

The Commission undertook a wide range of investigative measures and received feedback from key market participants in the digital music industry, including providers of music streaming and music recognition services, as well as other stakeholders.

The Commission found that:

  • the merged entity would not be able to shut out competing providers of digital music streaming services by accessing commercially sensitive information about their customers. In particular, access to Shazam’s data would not materially increase Apple’s ability to target music enthusiasts and any conduct aimed at making customers switch would only have a negligible impact. As a result, competing providers of digital music streaming services would not be shut out of the market;
  • the merged entity would not be able to shut out competing providers of digital music streaming services by restricting access to the Shazam app. This reflects the fact the app has a limited importance as an entry point to the music streaming services of Apple Music’s competitors; and
  • the integration of Shazam’s and Apple’s datasets on user data would not confer a unique advantage to the merged entity in the markets on which it operates. Any concerns in that respect were dismissed because Shazam’s data is not unique and Apple’s competitors would still have the opportunity to access and use similar databases.

Therefore, the Commission concluded that the transaction would raise no competition concerns in the EEA or any substantial part of it. A merger decision does not release companies from respecting all relevant data protection laws. 

[H/T Rolling Stone]