Apple's Acquisition of Shazam Faces a Problem: The European Union

Apple's Acquisition  Shazam Faces a Problem: The European Union

The European Union has ‘identified’ a potential problem with Apple’s buyout Shazam.

It was in December last year that Apple confirmed its acquisition Shazam for an undisclosed amount.  Insiders to Digital Music News estimated that amount to be in the ballpark $400 million.

Shazam Entertainment Ltd. is a British app development company.  Its app can identify music, movies, advertising, and television shows on the fly, based on a short sample.  Those samples are quickly picked up by the microphone on a smartphone, and processed by Shazam’s tiny app supercomputers.

The ‘Essential’ iOS app is indeed excellent, and used by more than a hundred million monthly active users in the world!  Since it was founded in 1999, the company has impacted the music industry, with Apple ultimately bringing the idea into its music umbrella.

Not everyone thought this was such a good idea.

A few days ago, the European Commission said that it would be reviewing the acquisition, based upon requests by a number European nations (some EU members, some not).  The acquisition wasn’t substantial enough to merit direct evaluation by the European Commission, though member nation Austria reportedly spurred the review.

Accordingly, Austria made use a European Union provision that allows EU countries to ask the EC to look at proposed mergers  Italy, France, Spain, and Sweden are among the countries that signed that request.

In a statement, the EC told Digital Music News,

“The European Commission has accepted a request from Austria, France, Iceland, Italy, Norway, Spain and Sweden to assess under the EU Merger Regulation the proposed acquisition Shazam by Apple.  The Commission considers the transaction may threaten to adversely affect competition in the European Economic Area.”

So what happens next?

Apple will now have to formally ask the Commission to approve the deal.  The European Commission could decide to clear the deal outright, approve with conditions, or move forward with a full investigation into the proposed acquisition.