Apple’s (AAPL - Free Report) pending acquisition of Shazam app, which can identify any song, TV show, movie or advertisement, finally received approval from the European Union (EU), per TechCrunch.
The iPhone maker announced the deal in December 2017 for an estimated $400 million. However, the price was significantly lower compared with the $1.02-billion valuation that Shazam received during its last funding in 2015.
Shazam Deal Faces EU Roadblock
Apple’s Shazam acquisition faced roadblock in EU after seven countries expressed concerns over negatively impacting competition in the European Economic Area (EEA).
Reportedly, Apple Music has become the second largest music streaming service in the region, trailing none other than Luxembourg-based Spotify Technology (SPOT - Free Report) .
In February, the European Commission announced a review of the deal that finally culminated into an “in-depth” investigation. Post completion of the probe, the commission expressed its satisfaction with the deal and stated that it will not adversely impact competition in the EEA, much to the relief of Apple.
Shazam Deal to Boost Apple’s AR Initiatives
Shazam was one of the first applications offered by Apple App store, way back in 2008. The application reportedly crossed 1 billion downloads in September 2016, reflecting significant popularity.
Shazam’s music recognition app already works with Apple’s digital assistant, Siri. The acquisition will now allow Apple to offer features like television show recognition as well as augmented reality (AR) brand marketing service to App store users.
Moreover, Apple will not pay the commissions related to the traffic that Shazam redirects to its iTunes store. This cost-saving initiative will ultimately boost profitability.
Apple is aggressively pushing into the AR market, thanks to its ARKit platform and plethora of acquisitions. At its last WWDC, the iPhone maker unveiled ARKit 2, with enhanced features like multiplayer for AR. The feature will allow two or more people to log in an app and see the same AR objects in the same shared space.
Apple has also been speculated to foray into the wearable AR glasses space. Reportedly, it partnered with renowned lens maker, Carl Zeiss in this regard. The company’s latest acquisition of Akonia Holographics, a manufacturer of lenses for AR glasses, strengthens this belief.
Moreover, the company bought several smaller firms with expertise in AR hardware, 3D gaming and virtual reality (VR) software.
Further, we believe that the Shazam acquisition will strengthen Apple’s position in the AR space, which is currently thronged by the likes of Facebook (FB - Free Report) , Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) .
Currently, Apple has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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