Europe Challenges Apple's Deal for Shazam Apple's Deal for Shazam Faces Test In Europe -- WSJ
April 24 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 (April 24, 2018).
BRUSSELS -- European Union antitrust authorities on Monday
opened a full-blown probe into Apple Inc.'s proposed acquisition of
song-recognition app Shazam Entertainment Ltd. on concerns it would
reduce choice for users of music-streaming services.
The deal would give Apple ownership of a popular app that helps
users identify songs, before directing them to Apple Music or
Spotify to listen to and potentially buy or stream the music. It
also would give Apple access to extensive information on consumers'
musical interests. Financial terms of the deal, announced in
December, weren't disclosed.
The European Commission, the bloc's antitrust authority, said it
was concerned Apple would gain access to data that would allow the
iPhone maker to directly target its rivals' customers and encourage
them to switch to its music-subscription service, Apple Music. EU
investigators said they would also probe whether competitors could
be harmed if Apple were to discontinue referrals to their services
from the Shazam app.
"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 antitrust chief
Margrethe Vestager said on Monday.
The EU could block the deal or extract concessions from the
companies in exchange for clearance.
Apple didn't comment. London-based Shazam said, "We respect the
European Commission's process and look forward to having the
acquisition closed," adding "we can't imagine a better home for
Shazam."
Control of data and large sets of personal information is
playing an increasingly important role in the EU's antitrust and
merger reviews. The bloc's regulators are scrutinizing whether
companies holding large amounts of data can use it to cut costs or
gain customers in a way that thwarts new competitors.
The EU is also considering changing its merger review rules to
include a wider swath of technology deals not typically within its
purview, such as the acquisition of a company that generates
relatively little revenue but holds commercially valuable data.
Referrals from Shazam could help Apple raise the number of
subscribers to its streaming-music service to better compete with
competitors. They include Spotify AB, which went public on the New
York Stock Exchange in early April and Tencent Music Entertainment
Group, China's largest music-streaming company, which is preparing
what would be one of the biggest technology IPOs ever, say people
familiar with the matter.
Apple initially registered the Shazam deal with regulators in
Austria, but authorities there, along with those in France, Italy,
Sweden and several other EU countries, asked Brussels to review the
deal instead. The national authorities were concerned the deal
could harm competition across the European market as well as within
their borders.
The European Commission said in February it would take over the
review of the merger from Austria. Then on Monday, the EU said it
would undertake a full-blown review given lingering concerns. Such
a process allows companies several more months to suggest steps,
such as selling assets, to win over regulators.
The EU has jurisdiction over a merger if the companies have
combined annual world-wide revenue of EUR5 billion ($6.1 billion)
and each has EUR250 million in revenue within the EU as a whole.
Apple's acquisition of Shazam doesn't meet those revenue
thresholds; the app in 2016 posted revenue of about GBP40 million
($56.2 million). But national regulators or companies are allowed
to ask the commission to make an exception
The EU said it was giving itself until Sept. 4 to decide on the
deal, though the deadline could still be extended.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
April 24, 2018 02:47 ET (06:47 GMT)
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