Facebook Fined £94m For Misleading EU Over WhatsApp Takeover

Facebook has been fined €110m (£94m) by
the EU for providing misleading information
about its 2014 takeover of WhatsApp.



The European commission said it had
imposed a “proportionate” fine on the
technology company to send a clear signal
that all firms must comply with EU
competition rules.



When Facebook took over the WhatsApp
messaging service in 2014 , it told the
commission it would not be able to match
user accounts on both platforms, but went
on to do exactly that.



The commission found
that Facebook staff
knew in 2014 that it
was technically
possible to link
WhatsApp phone
numbers with
Facebook users’
identities, contrary to their public
statements about the merger.



In a statement Facebook said the errors
were not intentional and noted that the
commission confirmed these submissions
had not changed the outcome of the
merger inquiry.



“Today’s announcement brings this matter
to a close,” Facebook said.
The fine could have been more than twice
the size, as competition authorities are able
to fine rule-breaking companies 1% of
annual turnover, which for Facebook was
$276m (£211m) in 2016. But the
commission said it had taken into account
the company’s cooperation during the
inquiry.



The decision to allow the Facebook-
WhatsApp merger is unaffected by the
latest announcement, the commission 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,’”
said the EU competition commissioner,
Margrethe Vestager. “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.”



The European Consumer Organisation
(BEUC) said it was disappointing that the
commission had not revised its original
decision in favour of the merger.


“It is
crucial in our data economy that
competition bodies more closely scrutinise
the potential consumer harm of a merger
between data-heavy companies,” said the
BEUC director general, Monique Goyens.



“The commission failed to do so when it
gave the go-ahead to the Facebook-
WhatsApp takeover.”



The European commission stressed the
latest fine was unrelated to national
antitrust inquiries. The German cartel office
is investigating whether Facebook is
abusing its dominant position by failing to
inform people about how their personal
data is being used. Investigations are also
under way in Belgium, the Netherlands and
Spain.



A French data watchdog fined Facebook
€150,000 on Tuesday for failing to prevent
users’ data being accessed by advertisers.


Speaking ahead of the announcement,
Vestager said she was closely watching the
outcome of investigations by the German
authorities and others, while noting that “in
our legislation you can be dominant
without necessarily breaking any rules”.


EU officials are assessing whether
competition rules need to be updated to
reflect the power of data-rich companies.


The last big revision of EU merger rules was
in 2004, the year Mark Zuckerberg launched
‘The Facebook’ at Harvard University, when
WhatsApp founders were still working at
the then internet powerhouse Yahoo.


The commission assess mergers using the
metric of turnover, which critics say fails to
capture the potential of a tech startup with
zero revenues, but big potential. Consumer
organisations are pressing for Brussels to
take account of the number of consumers
affected by a merger to assess whether it
would create a monopoly.


In a recent interview Vestager said it was
tricky to find an alternative metric to
turnover, for assets, such as knowledge,
patents or data.


“We try to prepare ourselves to make sure
we have the right set of glasses to make
sure we can see what is going on when it
comes to data,” Vestager told the Guardian.


“Data is a currency, it is a resource it is an
asset and it will play an enormous role in
the entire economy which is why with
other colleagues here we are playing close
attention to it.”