Facebook gave misleading information during WhatsApp buyout, Commission says

Contrary to what the firm said, the Commission believes that Facebook was capable of automatically matching its users' IDs with WhatsApp users' IDs already when the social media bought the online messaging service. [Flickr]

The European Commission could fine Facebook up to €170 million after it accused the social media giant of providing misleading information during its acquisition of WhatsApp.

The executive said on Tuesday (20 December) that it has “concerns that Facebook intentionally, or negligently, submitted incorrect or misleading information to the Commission” in regards to the merger of the users’ accounts after the takeover.

When the institution reviewed the case in 2014, the Commission was concerned about the possibility of Facebook matching its users’ accounts with WhatsApp users’ phone numbers.

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Facebook said it would be unable to give an automated matching between the two companies’ accounts.

WhatsApp updated its terms of service to begin sharing names and phone numbers with its parent company in August 2016.

The announcement provoked a huge backlash from users, who already had privacy concerns after the $22 billion buyout was announced.

The Commission believes that the technical possibility of automatically matching the users’ accounts of both companies already existed back in 2014.

“The Commission’s preliminary view is that Facebook gave us incorrect or misleading information during the investigation into its acquisition of WhatsApp. Facebook now has the opportunity to respond,” said Competition Commissioner Margrethe Vestager on Tuesday.

She added that, under the EU merger regulation, companies are obliged to give the executive “accurate information”.

Facebook now has until 31 January 2017 to reply. If the Commission’s preliminary views are confirmed, it could impose a fine of up to 1% of the company’s turnover.

The San Francisco-based firm’s revenue was  $17.93 billion in 2015.

No impact on acquisition 

The verdict will have no impact on the Commission’s approval of the merger of the two companies.

A Facebook spokesperson said that the firm acted “in good faith”.

“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,” she added.

The company announced that it would cooperate with the Commission and provide all the information requested by the EU officials.

In response to separate concerns from EU data protection watchdogs, Facebook agreed to stop sharing WhatsApp users’ information with Facebook in order to improve Facebook products and advertising experiences.

The watchdogs sent a letter to the company in October asking to identify what user data was shared with the social media company.

The watchdogs asked WhatsApp to “pause all sharing of users’ data” until they clarify whether it violates EU law.

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The group of powerful data protection watchdogs from EU countries have reprimanded Yahoo and WhatsApp over concerns the companies are violating Europeans’ privacy rights.

Background

In August 2014, Facebook notified the Commission its plans to acquire WhatsApp. On 3 October 2014, the Commission cleared the proposed acquisition.

The Commission assessed the impact of the transaction on markets for (i) consumer communications services; (ii) social networking services and (iii) online advertising services.

The executive found no competition concerns in any of these three fields.

Further Reading

  • 31 January 2017: Deadline for Facebook to respond to the concerns raised by the European Commission.