European Commission Approves Apple's $3 Billion Acquisition of Beats

[MacRumors]

The European Commission has approved Apple's acquisition of Beats Electronics and Beats Music (Via Engadget). The Commission concluded that merger posed no threat to competition as "the combined market share of Apple and Beats Electronics is low."

In its decision, the Commission noted that the Apple and Beats merger would not negatively effect either the headphone or the streaming music market in the European Union.

"The Commission concluded that the combination of the two businesses did not raise competition concerns because the combined market share of Apple and Beats Electronics is low. In addition, Apple and Beats Electronics are not close competitors because the headphones they sell differ markedly in functionality and design. Moreover, even after the transaction, a large number of global competitors such as Bose, Sennheiser and Sony would remain. The Commission also examined the transaction's likely effects on the distribution of digital music to consumers. Both Apple and Beats Music are active in this field. Apple offers a music downloading service through iTunes and Beats Music offers a music streaming service, although it is currently not available in the EEA. The Commission concluded that Apple faces several competitors in the EEA such as Spotify and Deezer, making it implausible that the acquisition of a smaller streaming service that is not active in the EEA would lead to anticompetitive effects."

Now that the EU has given its approval, the next hurdle for the acquisition is the United States with regulators also examining the deal and determining whether there are any anti-competitive concerns. Barring any unforeseen issues, Apple expects the $3 billion transaction to close this quarter (Q4 2014).

Article Link: European Commission Approves Apple's $3 Billion Acquisition of Beats

 

[Plutonius]

Just in time for Bose to try to get money out of Apple .

 

[bushido]

wow those are massive, am I the only one whos head / ears doesnt allow those headphones to fit? they always slide of my head, drives me INSANE. in-ears all the way for me

 

[69Mustang]

Just in time for Bose to try to get money out of Apple .

Very true. Bose is well known for being lawsuit happy.

 

[Parasprite]

Just in time for Bose to try to get money out of Apple .

Slightly off-topic, but I think if I were to have guessed which company Apple were buying six months ago, I would have definitely guessed Bose and not Beats

Not based on any value judgement or anything like that. Bose just seem to have a lot of the same ideals and marketing (i.e., minimalistic design, high profit margins, small product line)* and it would have seemed the more obvious way to go.

*Also probably the whole "reality distortion field" aspect of it. However, I detest the term itself so I avoid using it (fortunately I don't see it used much anymore).

 

[hetrigger]

Bose is suing Apple/Beats over noise canceling capabilities. They called it patent infringement.

 

[Parasprite]

Bose is suing Apple/Beats over noise canceling capabilities. They called it patent infringement.

For convenience, you can find more detailed documents linked here. They are summarised on 9to5Mac as follows:

• 8,073,151: “Dynamically configurable ANR filter block topology”. Granted 12/6/2011.
• 8,073,150: “Dynamically configurable ANR signal processing topology”. Granted 12/6/2011.
• 6,717,537: “Method and apparatus for minimizing latency in digital signal processing systems”. Granted 4/6/2004.
• 8,345,888: “Digital high frequency phase compensation”. Granted 1/1/2013.
• 8,054,992: “High frequency compensating”. Granted 11/8/2011.

*The above quote has been edited for readability; some content has been omitted.

 

[Karma*Police]

I still don't get this deal. A few million dollars and an executive who should have seen this coming is all it would've taken to get a music streaming service up and running.

They certainly didn't buy beats for their mediocre headphone technology.

And if they spent $3B for a couple of guys to help them with marketing, they should've just fired Schiller and hired another proven marketing executive. They would've had billions left over for an advertising blitz for their upcoming products.

 

[leo.andres.21]

wow those are massive, am I the only one whos head / ears doesnt allow those headphones to fit? they always slide of my head, drives me INSANE. in-ears all the way for me

Maybe, but that's why there are IEM, which fits your niche

 

[Parasprite]

I still don't get this deal. A few million dollars and an executive who should have seen this coming is all it would've taken to get a music streaming service up and running.

Apple already had a music streaming service; iTunes Radio was announced 6 months prior to Beats Music. However Beats technically already had the service in 2012 under another name (due to an acquisition).

Whether or not Apple acquired Beats to add to iTunes/eliminate competition, for their headphone line, or some other thing entirely is still yet to be seen. As of now, Apple hasn't a headphone style other than the earbud/in-the-ear style ones and they may be planning on something involving this (although I personally doubt it).

----------

wow those are massive, am I the only one whos head / ears doesnt allow those headphones to fit? they always slide of my head, drives me INSANE. in-ears all the way for me

I had a pair of wireless headphones that used 4 batteries on one side (very side-heavy), though I only wore them in my flat (for obvious reasons).

In retrospect, I'm amazed at how long I put up with those without owning rechargeable batteries...or really at all since they were basically rubbish.

 

[Dilster3k]

Can't believe it's a done deal...

 

[Mildredop]

What if European commission hasn't approved it? Apple and Beats are both American, why is it Europe's concern?

 

[krravi]

What if European commission hasn't approved it? Apple and Beats are both American, why is it Europe's concern?

It is Europe's concern because they *sell* it there. Unlike US where Corporations are free to run wild they have rules!

 

[PocketSand11]

Darn, that was our last hope

 

[Mildredop]

It is Europe's concern because they *sell* it there. Unlike US where Corporations are free to run wild they have rules!

So, if the EC said no, would that mean they couldn't go ahead? Or that they could go ahead but they'd no longer be able to sell their products in Europe?

And does that mean that, along with the US and Europe, every other country in the world needs to approve one company buying another? Seems like a very long process.

 

[ArtOfWarfare]

Apple already had a music streaming service;

They did, but it was a Pandora, radio, style, not a Spotify, play whatever you want whenever you want, style.

The radio style is where the majority of people never were nor ever will be. It's on a decline and services like Spotify are replacing it, plus they're replacing services where you buy the music.

 

[whooleytoo]

Slightly off-topic, but I think if I were to have guessed which company Apple were buying six months ago, I would have definitely guessed Bose and not Beats

Not based on any value judgement or anything like that. Bose just seem to have a lot of the same ideals and marketing (i.e., minimalistic design, high profit margins, small product line)* and it would have seemed the more obvious way to go.

That might be the reason why they DID choose Beats - because they appeal to a different (younger) demographic that Apple doesn't feel they're fully tapping into.

It must be hard to keep a brand fresh and current over a long period of time. If you don't change then the brand becomes dated and it's difficult to attract new users, if you change too much or too often you risk losing your established user base.

Buying a brand already hugely popular with younger users gives them a way-in to that market.

 

[krravi]

So, if the EC said no, would that mean they couldn't go ahead? Or that they could go ahead but they'd no longer be able to sell their products in Europe?

And does that mean that, along with the US and Europe, every other country in the world needs to approve one company buying another? Seems like a very long process.

I think that's how it works. If you remember the antitrust regulations long time ago started in EU against Microsoft for pushing IE over other browsers, failing which Microsoft will be denied selling its products to the EU and MS was fined a huge fine to the tune of 600 million dollars or something.

 

[Mums]

But I do not approve of Apple's $3 Billion Acquisition of Beats.

 

[DJJAZZYJET]

But I do not approve of Apple's $3 Billion Acquisition of Beats.

You and me both buddy.

 

[CarlJ]

I still don't get this deal. A few million dollars and an executive who should have seen this coming is all it would've taken to get a music streaming service up and running.

They certainly didn't buy beats for their mediocre headphone technology.

• Good or not, Beats headphones are popular. And they sell in Apple stores. Apple cuts out the middleman, gets a better deal. They also get a well-liked starting point, from which they can work on improving the actual sound.
• They get an up-and-running curated subscription streaming music service, along with the curators. And the deals with all the labels already worked out. And if the deals are exclusive to Beats, well, they have Beats (vs trying to buy just the streaming service).
• They get two savvy big names in the industry, with lots of contacts, to help them get better deals and get their foot in the door more places (better here being more encompassing usage terms, not necessarily just cheaper). I'm sure there are quite a few lesser known people in the company who are also in a similar position to hyelp. They'll probably also get opinions/help in making the iTunes Store more marketable to the younger demographic.

I can totally we why they were interested in getting Beats, I was a little astonished at the price (not that I know what it should have been, just... that's an awful lot of zeros after that 4).

With Bose, on the other hand, they'd pick up a lot of product lines they're not interested in (speakers and such), that'd be a sort of liability (both as extra baggage and as ending up competing against companies they'd rather be selling in their stores). Apple doesn't like taking on things they don't feel prepared to do well - it's a distraction from their primary focus. Bose has (or had, not sure any more) a lot of seriously good sound engineers on their staff, but all the other aspects of the company would be just baggage. This is the problem with most deals that folks excitedly suggest (e.g. "Apple should buy Sprint!" - yes, they'd get a cell network... along with a ton of existing subscriber contracts with people using non-Apple phones, and a ton of contracts with other phone makers - do you really think Apple would want to take on support of Android on Samsung phones as part of their business focus?).

 

[Worf]

Slightly off-topic, but I think if I were to have guessed which company Apple were buying six months ago, I would have definitely guessed Bose and not Beats

Not based on any value judgement or anything like that. Bose just seem to have a lot of the same ideals and marketing (i.e., minimalistic design, high profit margins, small product line)* and it would have seemed the more obvious way to go.

*Also probably the whole "reality distortion field" aspect of it. However, I detest the term itself so I avoid using it (fortunately I don't see it used much anymore).

While Beats' products do have a high profit mention, it wasn't until fairly recently that they were only receiving a fraction of it. Most of the profits actually went to Monster Cable, as they designed, manufactured and pretty much defined the hardware of Beats. Beats' managed to cut out Monster Cable and take further control of the supply chain a quarter or two before Apple acquired them

 

[mixel]

wow those are massive, am I the only one whos head / ears doesnt allow those headphones to fit? they always slide of my head, drives me INSANE. in-ears all the way for me

I love around the ear headphones.. They fit much better on my ears than on ear or in ear types.

I guess our heads/ears are different shapes?

----------

I still don't get this deal. A few million dollars and an executive who should have seen this coming is all it would've taken to get a music streaming service up and running.

They certainly didn't buy beats for their mediocre headphone technology

I don't think tech is the issue here at all.

I see more and more of apple's core "cool" demographic (students and young people) using beats plugged into their iphones/samsungs/whatevers.. Like, absolutely loads of people with beats. It reminds me of the old days of a few white earbuds here and there blossoming into everyone having them. I think part of the acquisition is just to have that marketshare and cool factor.

Having one of the most popular headphone brands must be fun too, as you can profit off of everyone's phones & players then, not just Apple stuff.

 

[Parasprite]

While Beats' products do have a high profit mention, it wasn't until fairly recently that they were only receiving a fraction of it. Most of the profits actually went to Monster Cable, as they designed, manufactured and pretty much defined the hardware of Beats. Beats' managed to cut out Monster Cable and take further control of the supply chain a quarter or two before Apple acquired them

If it wasn't clear, I was referring to Bose having a high profit margin, not Beats.

 

[ILikeAllOS]

And if they spent $3B for a couple of guys to help them with marketing, they should've just fired Schiller and hired another proven marketing executive.

They didn't just get Jimmy and Dre to help with marketing, they also acquired all the music contracts which they can presumably use in iTunes/iTunes Radio.