The Commission raised concerns about the proposed acquisition, due to the combination of Shazam’s peak position in the music recognition app market and Apple’s leading position in the music streaming service sector.
Margrethe Vestager, Commissioner in charge of competition policy, commented on the investigation saying: “The way people listen to music has changed significantly in recent years, with more and more Europeans using music streaming services.
“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 the proposed merger.”
There are growing concerns that the merger could threaten consumer choice and allow Apple to obtain an unfair advantage through accessing user data, which would allow them to steal customers from competitors.
Commenting on the investigation, Maria Sarantopoulou, a spokeswoman for the Commission said: “At this stage we are concerned that following the takeover of Shazam, Apple would obtain access to commercially sensitive data about customers of the competitors for music streaming services in the European Economic Area.
“This could allow Apple to directly target its competitors’ customers and encourage them to switch to Apple Music.
“As a result, competing music streaming services could be put at a competitive disadvantage.”
The spokeswoman also noted the Commission will be conducting further investigations into whether Apple Music’s competitors would be harmed by the merger.
Shazam is the world’s leading music recognition app and has been downloaded 1 billion times and is used 20 million times a day.
Once the app detects music it links to multiple music subscription services, which means the app may hold commercially sensitive data about Apple’s competitors.
Apple’s initial takeover bid, reportedly worth £3000m, was a move to help Apple Music better compete with the leader of the music streaming market Spotify.
How may the merger threaten consumers’ choice of music streaming services?
Ms Sarantopoulou commented on the issue, saying: “While the activities of Apple and Shazam are mostly complementary, the combination of the companies would bring together a major music distribution service provider and the leading music app in the market.
“Music recognition applications such as Shazam are one of the customer acquisition channels for music streaming services.
“Shazam is also in possession of user data relating to customers of competing music distribution services.”
She confirmed that the European Commission will be looking at both these aspects and whether the merger could potentially shut out competitors of Apple Music’s distribution services and thereby reduce choice for European consumers.
The Commission has 90 working days until September 4, 2018, to make a final decision on the merger.