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Apple’s acquisition of Shazam is at risk due to a new antitrust investigation

Apple Shazam acquisition antitrust

Apple’s acquisition of music recognition service Shazam, a deal reportedly worth $400 million, could be at risk after EU antitrust regulators announced Monday that they’ve opened a probe into the deal. Regulators are worried that Apple will use the service to push consumers to its own streaming service, hurting competition and unfairly advantaging its own service.

In a statement, EU Antitrust Commissioner Margrethe Vestager said the investigation hopes 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.” The regulator will conclude its initial investigation by September 4th, meaning that at the very least, the deal will be held up by several months.

The EU is particularly concerned that buying Shazam could give Apple access to “commercially sensitive” information about customers of other music services, like their listening habits. Apple could then use this information to target other users and bring them to Apple Music. The regulator is also concerned that Apple could stop Shazam from referring customers to competitors such as Spotify or Pandora, hurting competition. “Access to such data could allow Apple to directly target its competitors’ customers and encourage them to switch to Apple Music,” the EU said in its press release. “As a result, competing music streaming services could be put at a competitive disadvantage.”

Buying Shazam makes total logical sense for Apple: It gives the company a service and a way to convert people onto Apple Music. Song recognition is a neat trick for a digital assistant; one of the Google Pixel 2’s coolest tricks is background song recognition, which will tell you the name of a song from the lockscreen without you having to ever ask. At its simplest, acquiring Shazam could let Apple do something similar with Siri. Given Google’s advantage in data for AI, that would be reason enough to buy Shazam.

But buying the app also makes sense from a customer-acquisition perspective. Apple Music is one of a handful of big players in the music streaming business, where competition is starting to heat up. Spotify is rumored to be going for an IPO next year, while according to a report today, Google’s YouTube is planning on launching its own subscription streaming service in the near future. When users find a song on Shazam, the app prompts them where they can listen to (or buy) the song. If that links straight to Apple Music rather than a competitor, it could be a good way for Apple to boost its own service.