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December 20, 2016

Facebook ‘Misled’ EU on WhatsApp Takeover, Agency Claims

Two years after the fact, Facebook is being accused of misleading the European Commission so it could gain approval for the purchase of WhatsApp.

The EU said the social network “provided incorrect or misleading information” during the Commission’s 2014 review of the proposed transaction. That information, it is being alleged, led the EU to approve Facebook’s purchase of WhatsApp.

While the EU will not rescind its approval of the two-year-old $19-billion transaction, Facebook could be hit with a hefty fine if the regulatory body decides it is guilty of wrongdoing.

The European Commission today sent a Statement of Objections to Facebook asking the social media firm to respond to the accusation.

“Companies are obliged to give the Commission accurate information during merger investigations,” Commissioner Margrethe Vestager said in a press release. “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.”

During the investigation, the Commission examined the possibility of Facebook matching its users’ accounts with WhatsApp users’ accounts. Facebook told the Commission it would be “unable to establish reliable automated matching between the two companies’ user accounts.”

WhatsApp’s announcement in August that it would link WhatsApp user phone numbers with Facebook user identities, has led the EU to believe that the ability likely existed, and was hidden, two years ago. The change came as part of the revamp of the social network’s privacy policy in a bid to better enable businesses to communicate directly with users of the platform. As part of the updated policy, users’ phone number, profile name and photo, online status, last seen status and receipts will be shared. Content of messages will remain private.

“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,” the Commission said in a press release. “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.”

Facebook has until Jan. 31 to respond to the Statement of Objections. If the Commission does not like what Facebook has to say, the social network could find itself slapped with a hefty fine — as much as one percent of Facebook’s annual sales.

Facebook said it is “confident that a full review of the facts will confirm Facebook has acted in good faith.”

“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 this year,” Facebook said. “We’re pleased that the Commission stands by its clearance decision, and we will continue to cooperate and share information officials need to resolve their questions.”

It is likely the company will emphasize that WhatsApp users do have an opt-out option available to them. By going to Settings > Account, they can choose not to share their info with Facebook.


Jennifer Cowan is the Managing Editor for SiteProNews.