Facebook 'misled' EU regulators over its takeover of WhatsApp

Facebook misled European Union regulators over its 2014 takeover of WhatsApp, European Commissioner for Competition Margrethe Vestager said Tuesday. 

At issue is the company’s recent linking of Facebook and WhatsApp user accounts, something that it had previously told the Commission it would not be able to automate reliably.

The acquisition, announced in February 2014, won EU approval in early October that year, and was completed a few days later.

But now the European Commission has sent Facebook a “statement of objections,” alleging that the company gave it “incorrect or misleading information” during its antitrust investigation of the merger.

There’s no risk that the Commission will go back on its approval of the merger: This case is only concerned with whether Facebook followed EU procedures correctly.

The statement of objections gives Facebook until Jan. 31 to respond to the charges. If the Commission is not satisfied with the response, it could fine the company up to 1 percent of its worldwide revenue.

In August 2014, Facebook told the Commission that it would not be possible to reliably match information between Facebook and WhatsApp user accounts, a factor that the Commission took into account when granting its approval for the merger under EU antitrust rules.

But two years later WhatsApp updated its policies to allow it to automatically match users’ phone numbers with Facebook user accounts.

That means, the Commission suspects, that such automated matching was already technically possible back in August 2014, when Facebook said it could not be done reliably.

“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,” it said Tuesday.

The 2014 investigation concluded that Facebook and WhatsApp were not close competitors in the messaging market, were distant competitors in the social networking market, and that in the online advertising market there were sufficient alternative providers of advertising and sources of internet user information.

If the Commission subsequently finds that Facebook didn’t respect its procedural rules, it could fine the company 1 percent of worldwide revenue. Last year, the company reported revenue of around US$17.9 billion, a figure it has already topped in the first nine months of this year, so the potential fine could exceed $200 million.