MarketingSocialMedia

Facebook Fined By EU For ‘Misleading’ Over WhatsApp Deal

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Zuckerberg’s company ordered to pay £95m for misleading authorities during its purchase of WhatsApp

Facebook has been issued with a stiff financial penalty by the European Union over its $19 billion (£14.5bn) purchase of WhatsApp in 2014.

European Union antitrust regulators slapped Facebook with the 110 million euros (£93.8m) penalty, saying that the social network giant had provided misleading information during EU scrutiny of the deal.

Facebook’s acquisition of the popular mobile instant messaging app WhatsApp was highly controversial three years ago. Indeed, privacy advocates even filed official complaints, citing concerns about what Facebook intended to do with WhatsApp data and how it would monetise its customer base.

opentextMisleading Information

The EU stated this week that its Merger Regulation obliges companies in a merger investigation to “provide correct information that is not misleading as this is essential for the Commission to review mergers and takeovers in a timely and effective manner”.

It seems that when Facebook notified the EU of its acquisition of WhatsApp in 2014, it informed the Commission that it would be unable to establish reliable automated matching between Facebook users’ accounts and WhatsApp users’ accounts.

But in August 2016, WhatsApp announced updates to its terms of service and privacy policy, including the possibility of linking WhatsApp users’ phone numbers with Facebook users’ identities.

“The Commission has found that, contrary to Facebook’s statements in the 2014 merger review process, the technical possibility of automatically matching Facebook and WhatsApp users’ identities already existed in 2014, and that Facebook staff were aware of such a possibility,” the regulators said.

“Today’s decision sends a clear signal to companies that they must comply with all aspects of EU merger rules, including the obligation to provide correct information,” said Commissioner Margrethe Vestager. “And it imposes a proportionate and deterrent fine on Facebook. The Commission must be able to take decisions about mergers’ effects on competition in full knowledge of accurate facts.”

Facebook was quoted by Reuters as saying that the errors made in its 2014 filings were not intentional and that the Commission had confirmed they had not affected the outcome of the merger review.

“Today’s announcement brings this matter to a close,” Facebook reportedly said.

Data Sharing Probe

Meanwhile the EU authorities also said that the decision to impose a fine was unrelated to ongoing probes over Facebook’s controversial decision to update WhatsApp terms of service and privacy policy in August last year.

That change provoked ire because it meant that businesses could now send users messages, and Facebook could even use customer phone numbers to serve up more relevant ads.

Matters were not helped by the fact that WhatsApp founder Jan Koum had denied at the time of the acquisition, that WhatsApp would have to follow Facebook’s privacy policies.

Prior to its acquisition by Facebook, WhatsApp famously never carried adverts and always had a strong privacy slant.

Such was the controversy that Facebook had to suspend data sharing between its social network and WhatsApp across the European Union.

It had already earlier suspended such data sharing activity in the UK.

And Facebook is no stranger to fines at the moment.

Earlier this week it was fined 150,000 Euros (£128,000) by a French data watchdog for failing to prevent its users’ data being accessed by advertisers.

Prior to that Italian antitrust authorities hit the social network with a 3 million euro (£2.6m) fine for  obliging WhatsApp users to agree to share their personal data with Facebook.

Quiz: Can you protect your privacy online?