EU accuses Facebook of misleading it over WhatsApp merger (Updated)

20 Dec 2016

WhatsApp install screen. Image: BestStockFoto/Shutterstock

The EU has issued a formal statement claiming it was provided misleading information by Facebook over its takeover of WhatsApp in 2014, and could face a serious fine.

In the same week that Facebook has been told it will be fined €500,000 per fake news article that appears on the site, the social network has to face a potential legal battle with the EU over its WhatsApp takeover in 2014.

In a statement released by the European Commission (EC) today (20 December), the organisation said it issued a statement of objections to Facebook over its handling of the deal with Europe.

Linking of WhatsApp and Facebook accounts behind the issue

The issue stems from the allegation that Facebook provided “incorrect or misleading information” during the EC’s 2014 investigation as part of EU merger regulations.

During the review process, the EC discussed the possibility of Facebook matching its users accounts with WhatsApp users accounts, to which Facebook replied that it “would be unable to establish reliable automated matching” between the two companies accounts.

Yet in August of this year, an update of the terms of service to WhatsApp users revealed that it would be possible to link a WhatsApp phone number with a Facebook account in order to promote more specific advertising and linking of other Facebook friends.

“At this stage, the Commission therefore has concerns that Facebook intentionally, or negligently, submitted incorrect or misleading information to the Commission, in breach of its obligations under the EU Merger Regulation,” the statement said.

Could be fined 1pc of annual turnover

Going into the new year, the EC will begin a formal investigation into whether Facebook intentionally misled the European body in order to push the merger through, despite issues over privacy concerns.

Facebook has now been given an ultimatum of 31 January 2017 to respond to the accusation, but if the company is found to have breached the trust of the EC, it could be fined as much as 1pc of its annual turnover.

“Companies are obliged to give the Commission accurate information during merger investigations,” said Margrethe Vestager, commmissioner in charge of competition policy.

“They must take this obligation seriously. Our timely and effective review of mergers depends on the accuracy of the information provided by the companies involved.”

Updated, 3.04pm, 20 December 2016: This article has been updated to include a formal response from Facebook saying that everything it had provided the EC had been “in good faith”.

The statement reads: “We respect the Commission’s process and are confident that a full review of the facts will confirm Facebook has 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.

“We’re pleased that the Commission stands by its clearance decision, and we will continue to cooperate and share information officials need to resolve their questions.”

WhatsApp install screen. Image: BestStockFoto/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic