Facebook In Hot Water With European Regulators Over WhatsApp Merger

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December 20, 2016 8:55am Nasdaq:FB

Nasdaq:FB | News, Ratings, and Charts

From StockNews.com: Facebook Inc (NASDAQ:FB) is in hot water with EU regulators, accused of providing misleading information to the European Commission regarding its 2014 acquisition of ultra popular messaging application WhatsApp.


From the EU press release:

Commissioner Margrethe Vestager, in charge of competition policy, said: “Companies are obliged to give the Commission accurate information during merger investigations. 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. In this specific case, 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.”

Specifically, the commission’s concerns center on the potential matching of WhatsApp users’ accounts with their Facebook accounts. This practice, in turn, would have set off massive privacy alarms to the commission.

However, Facebook told the commission “that it would be unable to establish reliable automated matching between the two companies’ user accounts.”

Fast forward to August 2016, when WhatsApp updated its terms of service and privacy policy to include the potential to link WhatsApp users’ phone numbers with Facebook user identities. In other words, Facebook is now doing precisely what it told the EU it wouldn’t. What’s more, according to the commission, “contrary to Facebook’s statements and reply during the merger review, the technical possibility of automatically matching Facebook users’ IDs with WhatsApp users’ IDs already existed in 2014.”

Facebook has until January 31, 2017 to respond to the formal Statement of Objections. So far today, the company has yet to comment.

Facebook shares were mostly flat in premarket trading Tuesday. Year-to-date, shares of the world’s largest social network have gained 13.93%.

FB currently has a StockNews.com POWR Rating of C (Neutral), and is ranked #25 of 43 in the Internet category.

This article is brought to you courtesy of StockNews.com.


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