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THE POWER OF SHARING

The EU is charging Facebook for misleading it over the WhatsApp deal

Joon Ian Wong
By Joon Ian Wong

Technology Reporter

The European Union’s competition regulator says it was misled by Facebook over the tech company’s ability to match its users to accounts on WhatsApp, the messaging company that was acquired for $19 billion in 2014. The allegations are limited in scope and will not change the commission’s decision to clear the acquisition. However,Facebook could face a fine of 1% of its total revenue.

As the deal was being cleared, Facebook had told the European Commission’s competition regulator that it didn’t have the technical ability to reliably match accounts belonging to users on both platforms. Then this August, WhatsApp said it would start sharing data with Facebook so that it would have a better estimate of how many unique users it had. This would allow WhatsApp to better deal with spam and abuse, and provide Facebook users with more relevant ads, WhatsApp said.

The commission says it now believes Facebook had the ability to match its own users with Whatsapp accounts when the deal was done, but it presented misleading or incorrect information at the time, breaching EU merger rules. “The commission’s preliminary view is that Facebook gave us incorrect or misleading information during the investigation into its acquisition of WhatsApp,” said competition commissioner Margrethe Vestager.

The commission sent Facebook a statement of objections, or charge sheet, today. Facebook now must respond to the commission’s charges and then await a final decision by the competition authority. Facebook could be fined up to 1% of total revenue if found to be in breach of the rules. The firm reported $17.9 billion in revenue for 2015 (pdf). The Hamburg data protection authority ordered Facebook to stop collecting WhatsApp data (paywall) in September. WhatsApp data was being collected without the explicit consent of users, the regulator said.

Facebook maintains it gave the commission accurate information about its technical abilities all along. Facebook says it couldn’t match users between the two services in 2014 because of technical barriers, including WhatsApp’s plan to encrypt all its users’ communications, which was completed in April 2016. But it says it developed the ability to match accounts across its various services early this year, allowing it to accurately count the number of unique users on its services for the first time.

However, Facebook’s newfound matching ability doesn’t allow it to send messages across platforms, which it says was the subject of the commission’s questions when the merger was being cleared. Soon after developing the matching ability, Facebook executives met with commission officials in January 2016 to brief them on the plan to collect WhatsApp data, the company said.

Facebook said in a statement: “We’ve consistently provided accurate information about our technical capabilities and plans, including in submissions about the WhatsApp acquisition and in voluntary briefings before WhatsApp’s privacy policy update this year.”

The firm must respond to the commission by Jan. 31, 2017.

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