Facebook’s acquisition of Kustomer attracts EU scrutiny

6 Apr 2021

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The European Commission is examining a request to probe the deal, which has been flagged by other organisations concerned about data use.

Facebook’s acquisition of Kustomer, a customer services software start-up, could face an EU investigation.

The European Commission, the EU’s executive arm, has received a referral request from Austria that flagged concerns over the deal.

The commission, TechCrunch first reported, will first examine the request and make a decision in 10 working days on whether to proceed further with it.

Facebook announced in November 2020 that it planned to acquire Kustomer. Terms of the deal were not disclosed, but it was reported that the transaction was valued at $1bn.

Kustomer’s customer relationship management features and chatbots are expected to be integrated in some way into Facebook services like messaging for businesses.

In February, the Irish Council for Civil Liberties wrote to the European Commission to raise its concerns over the data that Kustomer has gathered and what may happen to that data under the ownership of Facebook.

The ICCL took issue with the wording of the announcement of the acquisition, where Facebook said Kustomer would help with “improving our service” but provided few specific details on how this would work.

“Many companies that people will recognise in their daily lives use Kustomer’s products, which include a ‘chatbot’. We note that Kustomer is used by organisations in healthcare, government, education and retail. As a result, Kustomer may have gathered a large amount of data, including special category personal data, about people,” the letter, signed by ICCL’s Johnny Ryan, said.

“We write to urge cooperation between relevant supervisory authorities, and due scrutiny of this acquisition, and of its data processing consequences.”

It’s not just in Europe that regulators are taking notice of the purchase. In March, the Australian Competition and Consumer Commission began an informal review into the acquisition.

This latest examination adds to the growing disquiet around Facebook deals with competition regulators. Last week, the UK’s Competition and Markets Authority opened a probe into its acquisition of Giphy, meanwhile the company is facing increasing scrutiny in the US over its long-closed deals to buy Instagram and WhatsApp and how those deals may have stifled competition.

Separately, the tech giant has been facing questions over a data leak in the last few days.

Jonathan Keane is a freelance business and technology journalist based in Dublin