European Commission charged £94 million to Facebook for giving the European Union a wrong idea about the company’s merger with WhatsApp (an instant messaging application). Also the Commission stated that it would not be withdrawing from its decision in order to allow the $19 billion merger.
The misleading information was that Facebook had said it could not automatically match user accounts of Facebook and WhatsApp but two years later launched a service that did exactly that. The commission found that Facebook knew of this possibility in 2014 despite the information it presented to the public during the merger, as in 2016 WhatsApp had updates including the option of connecting user’s phone numbers with Facebook user IDs. The competition policy in charge, Commissioner Margrethe Vestager, said: “Today’s decision sends a clear signal to companies that they must comply with all aspects of EU merger rules, including the obligation to provide correct information. And it imposes a proportionate and deterrent fine on Facebook.
The Commission must be able to take decisions about mergers’ effects on competition in full knowledge of accurate facts.” Facebook also made a statement about this matter saying: “We’ve acted in good faith since our very first interactions with the Commission and we’ve sought to provide accurate information at every turn. The errors we made in our 2014 filings were not intentional and the European Commission has confirmed that they did not impact the outcome of the merger review. Today’s announcement brings this matter to a close.” The competition authorities of EU could have fined Facebook up to one percent of its turnover which is £211 million but they decided not to as Facebook had cooperated with the proceedings and acknowledged it’s violation.
Recently Internet based services are coming under greater inspection by the authorities as several big companies are being inspected for performing any anti-competitive practices. EU mentioned that this case was dissimilar to the other general investigations going on. Tylor Wessing, an international law firm, has Richard Craig as its senior associate in the IT, Telecoms & Competition team. Richard said: “The fine shows the importance of being fully transparent with competition regulators when filing for merger control clearance, although some will no doubt claim that the commission should have gone further and reopened the investigation into the transaction. This is in large part as a result of an increasing focus on the relationship between the access that the major tech companies have to large and complex datasets and the potential for this to adversely affect competition.
Several transactions in recent years, including Facebook’s acquisition of Whatsapp and Microsoft’s acquisition of LinkedIn have been at least partly motivated by the desire to gain access to valuable data. These transactions are facing increasing scrutiny, in particular by privacy advocates, who fear that these deals will lead to a degradation of privacy protection for consumers.” The European Commission also stated that it would not be reversing its verdict to clear the WhatsApp acquisition worth of $19 billion merger.