EC Sends Statement of Objections to Facebook Over WhatsApp Acquisition

The European Commission is taking another look at Facebook’s October 2014 acquisition of WhatsApp.

The European Commission is taking another look at Facebook’s October 2014 acquisition of WhatsApp.

The EC sent a statement of objections to Facebook, focused on the social network’s assertion during the August 2014 review of the transaction that it did not have the ability to match information from Facebook user accounts and WhatsApp user accounts, and the social network has until Jan. 31 to respond.

Facebook faces a fine of up to 1 percent of its net sales.

The EC said in a press release:

When reviewing Facebook’s planned acquisition of WhatsApp, the commission looked, among other elements, at the possibility of Facebook matching its users’ accounts with WhatsApp users’ accounts. In its notification of the transaction in August 2014 and in a reply to a request of information, Facebook indicated to the commission that it would be unable to establish reliable automated matching between the two companies’ user accounts. While the commission took this information into account in its review of the transaction, it did not only rely on that information when clearing the transaction.

Subsequently, in August 2016, WhatsApp announced, among other updates to its terms of service and privacy policy, the possibility of linking WhatsApp user phone numbers with Facebook user identities. WhatsApp explained that this was done with a view to improving the service by, for example, allowing Facebook to offer better friend suggestions or displaying more relevant ads on WhatsApp users’ Facebook accounts.

In today’s statement of objections, the commission takes the preliminary view that, contrary to Facebook’s statements and reply during the merger review, the technical possibility of automatically matching Facebook users’ IDs with WhatsApp users’ IDs already existed in 2014. At this stage, the commission therefore has concerns that Facebook intentionally, or negligently, submitted incorrect or misleading information to the commission, in breach of its obligations under the EU Merger Regulation.

Commissioner Margrethe Vestager, who is in charge of competition policy, added in the release:

Companies are obliged to give the commission accurate information during merger investigations. They must take this obligation seriously. Our timely and effective review of mergers depends on the accuracy of the information provided by the companies involved. In this specific case, the commission’s preliminary view is that Facebook gave us incorrect or misleading information during the investigation into its acquisition of WhatsApp. Facebook now has the opportunity to respond.

Readers: How do you see this playing out?