1. News
May 18, 2017

EU Commission fines Facebook €110m for misleading information in WhatsApp deal

The European Commission has fined Facebook €110m ($122m) for providing incorrect or misleading information during its acquisition of messaging app WhatsApp back in 2014.

When the social network informed the Commission — the EU’s competition watchdog — it would acquire WhatsApp for $19bn, it said it would be unable to establish reliable automated matching between Facebook users’ accounts and WhatsApp users’ accounts.

However, in August 2016, WhatsApp announced an update to its terms of service and privacy policy, informing the app’s 1bn+ users that it would start sharing information with its parent company.

In a blog post, the company explained that phone numbers would be used to help target advertising and find friends to allow the two companies to “coordinate more in the months ahead and improve experiences across services”.

As a result, the Commission has found that, though Facebook said it wouldn’t be able to match accounts across the two platforms in 2014, the technical possibility of this already existed and Facebook staff were aware of such a possibility at the time.

Commissioner Margrethe Vestager, in charge of competition policy, said in a statement:

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. 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.

This is the first time the Commission has imposed a fine on a company for inaccurate information since the merger regulation rules were established back in 2004.

The fine could have been higher though.

The Commission can fine a company up to one percent of its turnover, which would have cost Facebook around $276m based on its 2016 results, however, it said Facebook cooperated with proceedings and acknowledged the infringement.

Facebook has responded by saying the errors made in its 2014 filings were not intentional and the Commission had confirmed the errors had not affected the outcome of the merge review.

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

Though this ends the Commission’s merger investigation, the fallout from Facebook’s acquisition of WhatsApp is far from over.

Last week, the Italian antitrust authorities fined WhatsApp €3m for “inducing” users of the messaging app to share their data with Facebook.

As well, German authorities banned Facebook from collecting information on its 35m WhatsApp users in the country after it breached data protection law and told the Silicon Valley-based company to delete all data it had taken from WhatsApp.

Facebook is appealing against both decisions.