Facebook fined £94m for ‘misleading’ EU over WhatsApp takeover

Facebook fined £94m for ‘misleading’ EU over WhatsApp takeover

European commission says fine is a ‘clear signal’ to companies that they must comply with EU merger rules

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This article titled “Facebook fined £94m for ‘misleading’ EU over WhatsApp takeover” was written by Jennifer Rankin in Brussels, for theguardian.com on Thursday 18th May 2017 10.10 UTC

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 she said in an interview. “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.”

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