Apple-Shazam Deal May Hurt Competition in Europe, EU Says

An employee walks through the lobby of the Shazam Entertainment Ltd. headquarters in London, U.K., on Friday, July 26, 2013. Billionaire Carlos Slim's America Movil SAB has invested $40 million in the London-based company behind the software with more than 70 million active users every month. Photographer: Simon Dawson/Bloomberg

• EU asks Apple to file deal with it instead of Austria
• Tie-up’s revenue doesn’t meet usual threshold for EU review

Apple Inc.’s takeover of music-identification service Shazam may threaten competition and should be reviewed by the European Commission, the regulator said.

Apple will be told to file to the Brussels-based antitrust authority. It was originally required to file only with Austria’s regulator, and didn’t have to involve the EU, which usually takes large deals that affect Europe. Austria, Iceland, Italy, France, Norway, Spain and Sweden all asked the EU to take on the oversight.

Big technology takeovers of start-ups with insignificant revenue fall through the EU’s usual net for checking whether deals harm competition. Alarmed that it nearly missed Facebook Inc.’s takeover of messaging service WhatsApp, the EU is seeking to change its rules to allow it to take charge of acquisitions where a target company makes no money but holds valuable technology or intellectual property.

Apple said it would work with the EU on the matter, but declined to provide further detail.

The EU did manage to review and approve the Facebook-WhatsApp deal after several European authorities asked the commission to step in. Facebook was later fined for misleading the EU during the merger probe. It had told the regulators it couldn’t combine WhatsApp data with its other services but moved to do so shortly after the deal was finalized.

Terms of the Apple-Shazam deal weren’t disclosed, but a person familiar with the situation said last year that Apple is paying about $400 million for the U.K.-based start-up. That would be one of Apple’s largest acquisitions ever. The Shazam app uses the microphone on a smartphone or computer to identify almost any song playing nearby, then points users to places they can listen to it in future, such as Apple Music or Google’s YouTube.

— With assistance from Mark Gurman.