Apple’s acquisition of the UK music-recognition app Shazam just hit a major snag. The EU’s competition regulator is investigating the deal.
The European Commission has announced it is looking into the acquisition following requests from seven European countries. The $400m deal is below the level the Commission normally investigates, however, it is above the merger notification threshold for countries like Austria, which is concerned.
Timeline for US tech giants
- April 1, 2020
- February 24, 2020
The Commission now has 35 working days for its initial investigation. If serious concerns are found, it then has a further 105 days to investigate the takeover.
What was said:
The European Commission said:
“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 of Shazam by Apple.Loading ...
“The Commission considers the transaction may threaten to adversely affect competition in the EEA.”
Why it matters:
The European’s competition commissioner, Margrethe Vestager, has made it her mission in office to curb the power of the US tech giants. Last year, Google was fined a record-breaking $2.7bn for breaking anti-trust law, following a seven-year investigation.
Vestager told The Financial Times:
“The motives that area breaching competition law are as old as Adam and Eve. It’s about greed. Fear. And when you combine that with power you get a very poisonous cocktail.”
As well, Vestager has ordered US companies such as Amazon and Apple to pay back taxes for using loopholes in Europe.
The investigation into Apple’s Shazam acquisition is another opportunity for the European Commission to prove that the US tech giants can’t do whatever they feel like it anymore.
Apple announced it was acquiring Shazam for $400m back in December. This was somewhat of a shock, considering Shazam was considered to be on the UK’s few unicorn startups, valued at $1bn or more.
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However, the $400m price tag was less than half the company’s previous valuation.
Unfortunately, the company has struggled to find a viable business model. In 2017, it posted revenue figures of only $55m. It only became profitable a year before.
However, due to the wide market of music recognition apps, such as SoundHound and MusicID, the Commissioner is concerned that an influx of Apple money into Shazam will render its competition irrelevant.