Facebook fined over $120 million for misleading EU about WhatsApp takeover

The European Commission announced that it has set a fine of €110 million for Facebook as the company provided incorrect or misleading information about WhatsApp takeover.

Facebook received a fine of €110 million, the equivalent of $120 million after the European Commission concluded that the social media giant provided incorrect or misleading information during the Commission’s 2014 investigation under the EU Merger Regulation of Facebook’s acquisition of WhatsApp.

“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.”

The European Commission is invested with the power of reviewing mergers and acquisition so as they comply with EU merger regulations. In this context, companies are under obligation to provide correct information about the takeovers, regardless of whether the information has an impact on the ultimate outcome of the merger assessment.

Back in 2014, when Facebook announced the merger, documents sent to the EU Commission stated that the company will not be able to establish reliable automated matching between Facebook users’ accounts and WhatsApp users’ accounts. But in the summer of 2016, WhatsApp announced customers that it had modified its terms of service and privacy policy stating that there is a possibility for linking WhatsApp users’ phone numbers with Facebook users’ identities.

Following a statement of objection from the European Commission’s part, which detailed concerns over the new terms, EU officials concluded that back in 2014, when the merger was announced, contrary to Facebook’s statement, the technical possibility of matching phone numbers with user identity already existed.

The European Commission is quick to point out that this detail has not impact on its merger authorization and that when it reviewed the takeover it also took into consideration the fact that there could be a technical solution in place to link users’ accounts. It also highlights that the current fine is unrelated to ongoing national antitrust procedures or privacy, data protection or consumer protection issues.

Facebook was fined for providing misleading information on two separate occasions while the merger was under review and more, the EU Commission suspects that the company’s employees were well aware of the fact that the technical possibility of matching the accounts already existed.

The European authorities also took into account that the social media giant acknowledged its infringement of the rules and waived its procedural rights to have access to the file and to an oral hearing. This allowed the Commission to conduct the investigation more efficiently. The Commission has taken Facebook’s cooperation into account in setting the level of the fine.

In August 2014, Facebook notified the EU Commission about its plan of acquiring WhatsUpp, a consumer communications services provider. At the beginning of October, the same year, the Commission cleared the transaction concluding that it did not violate antitrust or privacy and data protection laws.