On April 23, the European Commission (“Commission”) opened an in-depth investigation of Apple’s acquisition of Shazam in order to, in the words of Commissioner Vestager, ensure that “music fans won’t face less choice as a result of this proposed merger”. On September 6, 2018, the Commission concluded its investigation, issuing an unconditional clearance.

This story’s protagonists hardly need introduction. Apple is one of the world’s major tech companies, and the provider of the ‘Apple Music’ streaming service. Shazam, in turn, provides a leading music recognition app. However, as is not unusual with consumer-facing apps, Shazam generates relatively little turnover.

Procedure. Following debate as to how merger regimes most appropriately ensure scrutiny of acquisitions of products and services that are widely used but do not generate significant turnover, the German and Austrian authorities introduced Transaktionswert-Schwellen (“Transaction Value Thresholds”) which confer jurisdiction over acquisitions that would not meet the revenue-based thresholds (for more information, see the Guidance made available by the German and Austrian Competition Authorities and the Covington view on this). In any event, the Austrian authority had jurisdiction over the acquisition, and referred it to the Commission.

Substance. The Commission initially signaled that it had preliminary concerns regarding Apple’s future access to commercially sensitive data about customers of competitor music streaming services, because that could enable Apple to directly target its competitors’ customers (to encourage them to switch to Apple Music). Further, while the Commission had not concluded that Shazam was a key entry point for consumers to music streaming services, it decided to conduct a ‘what if’ investigation, inspecting the effects on Apple’s competitors if Apple were to discontinue referrals from Shazam to their services.

The Commission has now concluded that the acquisition does not raise competition law concerns in the EEA. More precisely, it has concluded that the merged entity would not be able to harm or push out of the market competing providers of music streaming services either by accessing commercially sensitive data about their customers or by restricting access to the Shazam app. In reaching this decision, the Commission concluded that the Shazam app was only of limited relevance as a point of entry to Apple Music’s music streaming competitors, and that the integration of Shazam’s and Apple’s user datasets would not confer a unique advantage on the merged entity, especially as rival streaming services would continue to be able to access and use similar databases.

The substantive questions raised by this case, and the Commission’s approach to them, appear to reflect the approach that the Commission has taken in recent years in other cases relating to data sets about consumer behavior, including in Facebook/WhatsApp and Microsoft/LinkedIn, where the data at issue was also deemed non-unique and replicable.

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Photo of Melissa Van Schoorisse Melissa Van Schoorisse

Melissa Van Schoorisse focuses on a wide range of complex antitrust issues, including multi-jurisdictional merger control filings, international and Belgian cartel investigations, state aid matters, and general behavioural advice, counselling and compliance work.

She specializes in the wider music, media, and entertainment sector

Melissa Van Schoorisse focuses on a wide range of complex antitrust issues, including multi-jurisdictional merger control filings, international and Belgian cartel investigations, state aid matters, and general behavioural advice, counselling and compliance work.

She specializes in the wider music, media, and entertainment sector as well as the transport, metals and mining, and the power generation and energy industry. In that context she has advised international and Belgian clients on the potential antitrust issues surrounding renewable or alternative energy sources, the consolidation of the Belgian energy sector, and the value of consumer data sets in merger control cases.

Melissa is well-regarded in the market, with clients praising her for being “very responsive, diligent”, “hands on” and giving “clear guidance.” “She is really good and knows the ins and outs of the BCA. She sees the big picture and the detail.” (Chambers Europe)

Prior to joining Covington, Melissa has gained extensive experience as an associate at two international law firms in Brussels, and as a secondee to the in-house competition team of a multinational oil and gas company in London, dealing with a wide array of vertical issues, cartel investigations, M&A transactions, and compliance training.