Credit: http://arstechnica.com/tech-policy/2016/12/facebook-whatsapp-european-commission-charges-misleading-merger-claim/
Looks like someone is about to be slapped with a hefty fine here. According to the Wall Street Journal, the European Union is unhappy with Facebook for providing the body with what it described as “incorrect or misleading information” when investigation into the purchase of WhatsApp was being carried out in 2014. The EU on Tuesday said the social media behemoth provided its investigators false information at the time of the probe.
The accusation was made in a formal statement of objections; adding that it suspects that Facebook gave inaccurate information during the takeover two years ago. According to the body, Facebook claimed it was impossible to reliably combine user accounts between Facebook and WhatsApp.
Facebook paid $12 billion of its stock value, and another $4 billion, while founders of the app got granted $3 billion Facebook stock. The deal which was initially kicked against by some European telecoms companies, eventually got the greenlight of the European Commission, declaring that both companies were not “close competitors.” The Commission also gave its approval based on the fact that consumers will still be left with a choice of applications to choose from.
However, Tuesday’s announcement seems to have opened a new chapter that may now lead to further investigations into the deal. The Commission has given the social media behemoth until the end of January to respond to the accusation that it violated its procedural rules for the approval of mergers. It [the Commission] said the probe “will not have an impact” on its approval of the merger. However, if the allegations are confirmed to be true, Facebook could be slammed with a heavy fine of up to 1 percent of its global revenue, the WSJ reports.
Facebook’s rebuttal
In its official reaction, Facebook has denied any wrongdoing in its dealings with the European Union per the information it provided at the time. The company in a statement said:
“We’ve consistently provided accurate information about our technical capabilities and plans,” a Facebook spokesman said. “We respect the commission’s process and are confident that a full review of the facts will confirm Facebook has acted in good faith.”
Wonder why it has taken the Commission two years to come up with this. Recall that the acquisition, which saw Facebook pay $19 billion to acquire WhatsApp didn’t face too much opposition before approval in 2014. One would have thought that the EU would have done a thorough job in 2014 rather than reopening an old issue two years later.
For Facebook, this is not coming at the right time, especially considering the fact that the company is already facing separate probes in Europe by some data protection regulators.
In September, Facebook was issued with an administrative order by Germany to stop collecting data on WhatsApp users. Germany’s privacy watchdog argued that sharing WhatsApp user data with Facebook constitutes “an infringement of national data protection law.”
The 1 percent fine could be based on Facebook’s 2015 turnover, which could amount to $179 million. Until Facebook responds to this accusation on or before January 31, I guess we may just have to wait to see what comes up next.
