Apple is Shutting Down Beats Music, Just Like Most Companies it Buys

November 13, 2015, 7:25 PM UTC
Tim Cook, Jimmy Iovine
Apple CEO Tim Cook, right, hugs Beats by Dre co-founder and Apple employee Jimmy Iovine at the Apple Worldwide Developers Conference in San Francisco, Monday, June 8, 2015. The maker of iPods and iPhones announced Apple Music, an app that combines a 24-hour, seven-day live radio station called "Beats 1" with an on-demand music streaming service. (AP Photo/Jeff Chiu)
Photograph by Jeff Chiu — AP

When Apple (AAPL) buys a company, chances are, the acquisition (or the employees) will be swallowed up, never to be seen again.

Apple announced on Thursday that it would shut down Beats Music, a move that comes less than six months after the premiere of Apple Music. All Beats Music subscriptions will be canceled on Nov. 30, but those who move to Apple Music will quickly discover that the $10-a-month streaming alternative incorporates many of Beats’ features.

While the death of Beats Music (Beats’ consumer electronics business will live on) may upset some users, it’s perhaps no surprise. In fact, one could argue that it’s surprising that it took Apple this long to shutter the service.

Apple bought Beats last year for $3 billion in large part for the technology behind its streaming-music service. Unlike so many recent acquisitions, Apple let Beats Music live on instead of its more typical strategy of immediately shutting down acquisitions after incorporating their technology into its own products.

Since 2013, Apple has made nearly three dozen mostly small acquisitions or acquihires, a tactic in which it will acquire a company’s employees but not the firm itself. It usually keeps quiet about them, although Beats is an exception to that rule because of its size. Usually, Apple will neither confirm nor deny that it has made an acquisition or acquihire, saying only that it will, from time to time buy startups. While its canned statement does little to satisfy those who want more details, nearly all of the companies that have been bought by Apple have confirmed it through their LinkedIn pages or on their own websites.

Apple declined comment for this article.

In April, Apple acquired a camera company named Linx. Like the others Fortune analyzed, neither Apple nor the target company would talk about the iPhone maker’s intentions for it. However, Linx has since gone dark, its website scrubbed from the Internet, and some of its employees are now working at Apple. In fact, Linx co-founder and CEO Ziv Attar is now heading up camera algorithms at Apple, according to his LinkedIn page.

Last year, Apple acquired Swell, an audio-streaming service that catered to music and podcast listeners. Again, Apple wouldn’t say why it bought the company, but the service was promptly shut down.

The list of companies Apple acquired and subsequently shut down goes on: book-recommendation service BookLamp was nixed in June 2014, followed by digital magazine platform Prss in Sept. Dryft, a keyboard app, went dark in 2014. Even PrimeSense, a 3D sensing company, has stopped selling its products to other companies and is now living inside the growing Apple.

In 2012, Apple made an important acquisition by buying AuthenTec, a company that made biometric technology that ultimately became the backbone of its Touch ID fingerprint sensor. Immediately after the company was under Apple’s control, Android smartphone makers had to look elsewhere for biometric technology. It was an issue that put Android vendors on their heels, former Motorola CEO Dennis Woodside said in an interview earlier this year.

“The secret behind that is that it was supposed to be fingerprint recognition, and Apple bought the best supplier,” Woodside told The Telegraph about the Nexus 6, which was originally meant to come equipped with a fingerprint sensor using AuthenTec technology. “So the second-best supplier was the only one available to everyone else in the industry.”

Of course, Apple is not the only tech company to acquire smaller firms and promptly shut them down. Google (GOOG), Facebook (FB), and other prominent technology companies will sometimes make similar moves. However, an analysis of their recent acquisitions—especially those of Facebook, which include image-sharing app Instagram and chatting app WhatsApp—show that they’re not as consistent as Apple at shuttering companies quickly after they acquire them. For example, a video-editing company Google acquired this week, Fly Labs, is still around. Better yet, it’s now making its apps available for free for a period of three months before Google finally takes them down.

Experts say Apple’s acquisition strategy is based in part on its desire to cut off potential competitors from accessing technologies it deems important. Moreover, Apple isn’t interested in letting a service continue on and potentially distract it from improving its own services like Apple Maps, Apple Music, or Apple TV, they say.

“Apple usually makes technology acquisitions that enhance their existing or future offering,” says Trip Chowdhry, managing director of equity research at Global Equities Research. Chowdhry added that Apple’s acquisition of database company FoundationDB in March was “shut down to launch the product with Apple tvOS.” Beats Music’s shutdown, he says, is all about improving Apple Music. It’s also believed that the FoundationDB acquisition was used to improve the company’s handling of data across its many products, including Apple TV, iPhone, iPad, and the Mac.

But perhaps there is more to Apple’s acquisitions than meets the eye. While the company clearly has no issue taking services down to improve its own, one could argue that Apple’s acquisition targets also benefit. They are, after all, making some cash from their inventions and incorporating their technologies into Apple’s services. They get more reach than they ever would have as independent companies.

So, while Apple’s acquisition playbook may seem all about the company and its users, entrepreneurs don’t seem to lose here, either. Apple may protect its business with acquisitions and it may bring startups under its roof, but eventually, those technologies find their way into the company’s products. And hopefully, they benefit more people than they otherwise would.

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For more on Apple’s Beats Music decision, check out the following Fortune video:

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