Facebook Inc. risks a multimillion-euro fine for allegedly misleading European Union merger watchdogs when it won approval to buy the WhatsApp messaging service in 2014.
The EU’s antitrust authority said Tuesday it suspects Facebook supplied "incorrect or misleading information" on linking data with WhatsApp as officials investigated the tie-up two years ago. Approval for the $22 billion deal isn’t under threat, regulators said.
EU Competition Commissioner Margrethe Vestager is escalating the probe after officials quizzed Facebook over privacy policy changes announced in August that would allow the advertising platforms on Facebook and Instagram to draw upon data from WhatsApp. The Menlo Park, California-based company informed the EU in 2014 it couldn’t combine WhatsApp data with its other services -- a move it made earlier this year.
“These are serious allegations,” said Agustin Reyna of the European consumer advocate group BEUC. “If Facebook provided misleading information about its ability to match Facebook and WhatsApp accounts it basically blocked the commission from checking the implications of data of this merger. This is unacceptable and sheds a bad light on the company’s readiness to respect consumers’ privacy."
‘Good Faith’
The U.S. company is "confident that a full review of the facts will confirm Facebook has acted in good faith," it said in an e-mailed statement Tuesday. "We’ve consistently provided accurate information about our technical capabilities and plans, including in submissions about the WhatsApp acquisition and in voluntary briefings before WhatsApp’s privacy policy update."
Facebook informed regulators in August 2014 that it wouldn’t be able to establish "reliable automated matching between the two companies’ user accounts," the EU said. The European Commission now says this was technically possible at the time. Facebook has until Jan. 31 to respond to the EU’s statement of objections.
The punishment for breaking the rules is as high as 1 percent of annual sales. Tetra Laval BV paid a 90,000 euro penalty in 2004 for not informing the EU about technology it owned.
‘Tangible Consequences’
Markus Ferber, a German member of the European Parliament, said Facebook should face "tangible consequences" if the probe shows it deliberately made false statements, according to an e-mailed statement. EU regulators were also wrong "to ignore the important role played by data for companies in the digital economy," he said.
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The EU’s merger authorities have usually shunned calls for them to examine concerns over data privacy. Their review of the WhatsApp deal only examined how Facebook’s control of data might strengthen its position in online advertising, determining that there was no overlap between the companies and that WhatsApp didn’t collect any user data valuable for advertisers nor would the deal increase the data available to Facebook’s ad services.
The EU antitrust complaint caps a terrible year for Facebook in Europe as regulators took aim at how it uses personal data and shares posts that may incite hatred. Germany opened an antitrust investigation in March to check whether the company unfairly forces users to sign up to restrictive privacy terms.
Facebook was then ordered in October to stop combining data with WhatsApp as privacy authorities across Europe examined the company’s change in policy. Germany is separately threatening new laws to prevent sharing of fake news and hate speech online.
(Bloomberg)
