InMusic Threatens Legal Action Over AlphaTheta’s $100M Serato Acquisition

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InMusic Serato legal action

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Photo Credit: InMusic

InMusic threatens legal action over AlphaTheta’s $100 million Serato acquisition, which would transform 90% of the digital DJ market into a monopoly.

Audio equipment manufacturer InMusic is threatening legal action in several regions to block the acquisition of Serato by Pioneer DJ’s parent company, Japanese electronics corporation AlphaTheta. AlphaTheta confirmed a $100 million deal in July to acquire the Auckland, New Zealand-based music software company.

Should the acquisition move forward, the two dominant digital DJ and production platforms worldwide — Serato and Rekordbox — would be owned by the same conglomerate, accounting for 90% of the market share. Such a move would effectively eliminate competition, to which many concerns have been raised.

US-based InMusic has launched a publicity campaign with ads appearing in New Zealand media starting on August 24 to raise awareness of the controversy surrounding the buyout. In the ads, InMusic explains that a 20-year partnership with Serato will be forced to end should the deal move forward, as Pioneer is a direct market rival — and developing alternative software in-house without such a partnership could take years.

“When we work with Serato, we give them our product up to a year ahead of time so they can analyze it and put the software in. If I was handing it to the new dominant player, I’m essentially handing it to my competitor,” explains Jack O’Donnell, InMusic CEO.

“I am quite confident what’s happening here, and it’s an outrage as far as I’m concerned,” he continues. “In any market, when you eliminate competition, it has an effect on consumers. It’s going to raise prices, eliminate innovation, and limit choice. So it’s a big thing for a small industry.”

According to O’Donnell, Pioneer’s Rekordbox accounts for 72% of the global market share for DJ audio equipment, while InMusic has maintained around 18%. Without continued partnership from Serato, it would take InMusic an estimated three to five years to develop its own software, essentially fighting a losing battle.

“While New Zealand is the battleground, this is a global fight, as this is a global issue,” says O’Donnell. “We’re in early discussions with them, but we think we have legal grounds to fight in multiple jurisdictions.”

The acquisition is still pending approval from the Overseas Investment Office, but the focus there will not be on competition-related issues.