Apple-Shazam Deal Draws EU Scrutiny -- WSJ
February 07 2018 - 3:02AM
Dow Jones News
By Natalia Drozdiak
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 7, 2018).
BRUSSELS -- Apple Inc.'s acquisition of the popular
song-recognition app Shazam Entertainment Ltd. may adversely impact
competition in Europe, European Union antitrust authorities said
Tuesday, announcing they would take over the merger review from
national regulators in Austria.
The move fits with a broader strategy by the EU to more closely
scrutinize mergers involving data-rich companies, but whose revenue
falls below traditional thresholds that determine whether a deal
merits a review by EU authorities. Top EU officials often stress
the value of data in the marketplace as a "new form of
currency."
Apple said in December it would acquire the UK-based developer
at a time when the iPhone maker is looking to boost its
music-subscription service. The deal would give Apple ownership of
an app that helps users identify unfamiliar songs. It also would
give the company access to extensive data and insight on people's
musical interests. Financial terms of the deal weren't
disclosed.
Apple initially registered the deal with regulators in Austria,
but the EU said it had concluded that regulators in Brussels were
"the best placed authority to deal with the potential cross-border
effects of the transaction." Apple now has to register the deal in
Brussels.
Austria, France, Italy, Sweden and several other EU countries
asked Brussels to take over the review on concerns the deal could
harm competition in their member states as well as impact trade
within the European market.
Apple didn't immediately respond to a request for comment.
Apple and the European Commission, the bloc's competition
regulator, have been at loggerheads over the EU's decision in 2016
to order the smartphone maker to pay Ireland EUR13 billion ($16.2
billion) in allegedly unpaid taxes. Both Ireland and Apple are
appealing the decision.
The probe into the Shazam acquisition comes as the EU is
considering changing its merger review rules to include a wider
swath of technology deals that normally wouldn't fall within its
purview, such as a merger involving an acquired company that
generates relatively little revenue but holds commercially valuable
data.
The commission, which has the power to block deals or seek
concessions like the sale of certain assets, only has jurisdiction
over a merger if the companies have combined annual world-wide
revenue of EUR5 billion and each has EUR250 million in revenue
within the EU as a whole.
Apple's acquisition of Shazam doesn't meet those traditional
revenue thresholds but national regulators or companies are allowed
to ask the commission to make an exception. Shazam in 2016 posted
revenues of about GBP40 million ($56.2 million), up from about
GBP35 million in 2015.
The commission has been considering the new rules after Facebook
Inc. paid roughly $22 billion for WhatsApp -- a deal that was
eventually cleared unconditionally by the EU in 2014.
The commission wasn't expected to review the deal because the
messaging app doesn't have sufficient revenue in the region. But
Facebook asked the commission for a single review that would cover
the 28-nation bloc, rather than face the possibility of separate
reviews in three or more EU countries.
--Sam Schechner contributed to this article.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
February 07, 2018 02:47 ET (07:47 GMT)
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