EC Approves Facebook’s WhatsApp Acquisition

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EuropeanUnionFlags650Confirming last week’s predictions, the European Commission, the central antirust authority of the European Union, approved Facebook’s $ 19 billion acquisition of cross-platform messaging application WhatsApp, which was originally announced in February.

The EU said in a press release announcing its decision that it did not believe WhatsApp and Facebook Messenger were close enough competitors to stifle other entrants into the messaging sector, and that the combination of Facebook and WhatsApp would not lessen consumer choice.

The deal was approved by the U.S. Federal Trade Commission in April, with the condition that WhatsApp must maintain its pre-Facebook privacy practices.

In May, the social network requested that the EC review the proposed merger, rather than subjecting the transaction to investigations in several individual countries in the EU region.

EC officials sent detailed questionnaires to rival online messaging companies in July, and later that month, Facebook said in its Form 10-Q filing with the Securities and Exchange Commission that it extended its deadline to close the acquisition by one year, to Aug. 19, 2015.

In September, the EC sent more questionnaires to entities including telecommunications operators, other social-networking sites and Internet-service providers.

The EC said in its press release:

The European Commission has authorized, under the EU Merger Regulation, the proposed acquisition of WhatsApp by Facebook, both of the U.S. Facebook (via Facebook Messenger) and WhatsApp both offer applications for smartphones (so-called “apps”) that allow consumers to communicate by sending text, photo, voice and video messages. The commission found that Facebook Messenger and WhatsApp are not close competitors and that consumers would continue to have a wide choice of alternative consumer communications apps after the transaction. Although consumer communications apps are characterized by network effects, the investigation showed that the merged entity would continue to face sufficient competition after the merger.

Although WhatsApp is not active in online advertising, the commission examined whether the transaction could strengthen Facebook’s position in that market and hamper competition. In particular, the commission examined the possibility that Facebook could introduce advertising on WhatsApp and/or use WhatsApp as a potential source of user data for improving the targeting of Facebook’s advertisements. The commission concluded that, regardless of whether Facebook would introduce advertising on WhatsApp and/or start collecting WhatsApp user data, the transaction would not raise competition concerns. This is because after the merger, there will continue to be a sufficient number of alternative providers to Facebook for the supply of targeted advertising, and a large amount of Internet user data that are valuable for advertising purposes are not within Facebook’s exclusive control.

EC vice president in charge of competition policy Joaquín Almunia added:

Consumer communications apps keep European citizens connected and are becoming increasingly popular. While Facebook Messenger and WhatsApp are two of the most popular apps, most people use more than one communications app. We have carefully reviewed this proposed acquisition and come to the conclusion that it would not hamper competition in this dynamic and growing market. Consumers will continue to have a wide choice of consumer communications apps.

Readers: Any reactions to the EC approval of the Facebook-WhatsApp merger?

Image of EU flags courtesy of Shutterstock.

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