EU fines Facebook €110 million for misleading WhatsApp takeover
The European Commission has fined Facebook 110 million euros for providing misleading information in the acquisition of WhatsApp. Despite a denial from Facebook, it turned out to be possible to combine private data of users of Facebook and WhatsApp.
Commissioner Margrethe Vestager, who is responsible for competition, said the fine decision sends a clear signal to companies that they must comply with all EU rules on takeovers, including the obligation to provide correct information. She emphasized the importance of the European Commission in taking decisions on mergers and acquisitions on the basis of all available facts and information.
The European Commission approved the deal in 2014, partly because of the determination that Facebook and WhatsApp would not be direct competitors and that consumers would still have plenty of choice from alternative apps for communication after the acquisition. During the approval process for Facebook’s acquisition of WhatsApp in 2014, the social network said it was technically not possible to combine accounts from both services. From August 2016, however, Facebook did, partly to show more relevant advertisements.
According to the Commission, Facebook not only twice provided misleading information about being able to combine user accounts, but it was also aware of the possibility of combining this data. The Commission calls Facebook’s breach of obligations ‘negligent’. It is the first time that the Commission has fined a company for providing misleading information in the context of an acquisition.
Under the Merger Regulation, the European Commission can impose a fine of up to one percent of a company’s global annual turnover, which in the case of Facebook amounts to approximately $276 million, or about EUR 247 million. The reason why the fine was set at EUR 110 million instead of EUR 247 million is related to extenuating circumstances, such as the fact that Facebook cooperated with the Commission in the investigation. Facebook has also admitted to breaking the rules and has withheld from a public hearing, allowing the Commission to better conduct the investigation.