Apple's $3B Beats acquisition gets EU approval

Regulators say that the acquisition raises no competition concerns because the companies' combined market share is low.

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From left: Beats co-founder Jimmy Iovine, Apple CEO Tim Cook, Beats co-founder Dr. Dre, and Apple SVP Eddy Cue. Apple

Apple and Beats are one step closer to finalizing their deal and making Beats' headphones and music service are part of the tech giant.

The European Commission on Monday announced that it has approved Apple's planned $3 billion acquisition of Beats Electronics. The Commission, which analyzes such deals and ensures competition in the marketplace on behalf of the European Union, said that the deal creates no "competition concerns because the combined market share of Apple and Beats Electronics is low" in the audio market.

Apple announced in May that it would acquire Beats in a deal that includes $2.6 billion up front and another $400 million that vests over time. Beats, which was co-founded by rap star Dr. Dre and music executive Jimmy Iovine, is perhaps best known for its headphones, which have become an iconic part of pop culture. The company has also launched a subscription-based music service that got the attention of Apple CEO Tim Cook.

"We love the subscription service that they built," Cook said at the time in an interview with the Wall Street Journal.

Apple has said that it hopes to close the deal by the end of its fiscal fourth quarters in September. As with other major acquisitions, Apple must first seek and receive approval from regulators around the world. The European Commission tends to be relatively quick to make decisions. Apple is still waiting on US regulators to chime in.

To support its approval of the deal, the European Commission pointed to several competitors facing Apple and Beats in the headphones space, including Bose and Sony.

The regulators also examined Beats' music service and again found no concerns as it relates to streaming music. They said that since Beats Music does not operate in the EU, they had no significant concerns, and also said that since Beats Music has a small share of the streaming space, Apple likely won't be able to affect competition in that market.

"The Commission also concluded that the transaction would not give Apple the ability and incentive to shut out competing streaming services from access to iOS, Apple's operating system for mobile devices," the agency wrote. "It based this conclusion, amongst others, on the fact that Apple was already active in the distribution of digital music before the merger. Hence, the merger would not change Apple's ability or incentive to block access to its iOS."

CNET has contacted Apple for comment on the approval. We will update this story when we have more information.

About the author

Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.

 

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