The proposed acquisition of the UK music-recognition app Shazam by Amazon will now be formally investigated by the European Union.
Apple would gain an unfair advantage by getting access to user data and limit the choice of the consumers whereby Apple could be able to draw away consumers from rivals easily were the allegations against which an in-depth investigation has bene initiated by the European Commission.
Shazam’s monthly usage rate is or 20 million while it has already been downloaded by users over 1 billion times. there is possibility that the app can have access to and already hold sensitive data about competitors of Apple and the consumers of the rivals because the app is able to first listen to a track, identify it and then use its data base information to link the track with multiple subscription services. This has made it the leading music recognition system in the world.
The EC said: “Access to such data 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” while also adding that the second largest music streaming service in Europe is Apple Music.
In case Apple took the strategy of discontinuing referrals from Shazam in favor of other like Spotify and Dezer, the likely material impact on competitors would also be investigated by the EC.
With the aim of enabling Apple to be able to compete with Netflix – the market leader, the deal worth £300 million between Apple and Shazam was confirmed in December. Seven European countries including France, Italy, Spain and Sweden requested the EC to investigate the acquisition and it initiated a preliminary investigation into the deal in February. A decision to allow or block the takeover will have to be taken by the regulators by 4 September this year.
Competition commissioner Margrethe Vestager said: “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 this proposed merger.”
There are number of battles that Apple is facing in the music streaming business. Swedish company Spotify has been able to build a dominating position in the industry as Apple was slow to enter the industry. Aided by a popular free, ad-supported tier, there are 71 million paying subscribers for Spotify.
As of March 2017, there were 38 million paying subscribers of Apple Music and it is believed that the capacity of Apple to context with Google’s voice-assistant services would also be boosted by the Shazam deal. Compared to Apple’s Siri, Google Assistant is a step ahead as it already has a music-recognition system inbuilt in. this has places Apple in third position in capability after Google’s Assistant and Amazon’s Alexa.
(Adapted from TheGuardian.com)