EU accuses Facebook of giving misleading information during WhatsApp takeover

[December 20, 2016]  By Julia Fioretti

BRUSSELS (Reuters) - The European Commission has charged Facebook Inc with providing misleading information during its takeover of the online messaging service WhatsApp, opening the company to a possible fine of 1 percent of its turnover.

The statement of objections sent to Facebook will not have an impact on the approval of the $22 billion merger in 2014, the Commission said in a statement on Tuesday.

Facebook becomes the latest Silicon Valley target of EU antitrust chief Margrethe Vestager, who has demanded Apple pay back $14 billion in taxes to Ireland and hit Google with two market abuse investigations.

The issue regards a WhatsApp privacy policy change in August when it said it would share some users' phone numbers with parent company Facebook, triggering investigations by a number of EU data protection authorities.

The Commission said Facebook had indicated in its notification of the planned acquisition that it would be unable reliably to match the two companies' user accounts."

"In today's Statement of Objections, the Commission takes the preliminary view that, 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," it said.

"The Commission's preliminary view is that Facebook gave us incorrect or misleading information during the investigation into its acquisition of WhatsApp," said Vestager, the EU's competition commissioner.

A 3D printed Whatsapp logo is seen in front of a displayed stock graph in this illustration taken April 28, 2016. REUTERS/Dado Ruvic/Illustration

Facebook has until Jan. 31 to respond. If the Commission's concerns are confirmed it can impose a fine on the U.S. company of up to 1 percent of turnover. Companies fined can appeal to the European Court of Justice, which has overturned some penalties in the past.

"We respect the Commission's process and are confident that a full review of the facts will confirm Facebook has acted in good faith, a Facebook spokeswoman said.

"We've consistently provided accurate information about our technical capabilities and plans, including in submissions about the WhatsApp acquisition and in voluntary briefings before WhatsApp's privacy policy update this year," she added.

The company will continue to cooperate and give the information officials need to resolve their questions, she said.

In response to separate concerns from EU data protection watchdogs Facebook has agreed to stop sharing WhatsApp users' information with Facebook for the purposes of improving Facebook products and advertising experiences.

The watchdogs wrote to the company last week asking for more information about the privacy policy change.

(Reporting by Julia Fioretti; Editing by Philip Blenkinsop, Greg Mahlich

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