Face­book set for fine over What­sApp

Brus­sels was mis­led on data shar­ing So­cial me­dia group’s third penalty in a week

Financial Times USA - - FRONT PAGE - MADHUMITA MURGIA — LON­DON ROCHELLE TOPLENSKY — BRUS­SELS

The Euro­pean Com­mis­sion is set to fine Face­book for mis­lead­ing au­thor­i­ties dur­ing the 2014 takeover of What­sApp, in the lat­est case of Brus­sels tak­ing on a Sil­i­con Val­ley gi­ant over its data prac­tices.

The Euro­pean Com­mis­sion is poised to fine Face­book for mis­lead­ing au­thor­i­ties dur­ing its takeover of mes­sag­ing ser­vice What­sApp in 2014, in the lat­est case of Brus­sels tak­ing on a Sil­i­con Val­ley gi­ant.

The com­mis­sion will not re­verse its de­ci­sion on the merger it­self but is ex­pected to levy a large penalty to de­ter other groups from pro­vid­ing mis­lead­ing in­for­ma­tion. It can im­pose a max­i­mum fine of 1 per cent of Face­book’s 2016 turnover, or $276m, although it has not dis­closed how much the fine will be.

“Timely and ef­fec­tive re­view of merg­ers de­pends on the ac­cu­racy of the in­for­ma­tion pro­vided by the com­pa­nies in­volved,” said Mar­grethe Vestager, EU com­pe­ti­tion chief, when she an­nounced the in­ves­ti­ga­tion in De­cem­ber, charg­ing Face­book with mis­lead­ing it dur­ing the ap­proval process of its $21.8bn takeover of What­sApp in 2014.

In a “state­ment of ob­jec­tions” an­nounced at that time, Brus­sels al­leged Face­book had falsely claimed that it was tech­ni­cally im­pos­si­ble to com­bine user data from Face­book and What­sApp au­to­mat­i­cally. Ms Vestager added: “Com­pa­nies are obliged to give the com­mis­sion ac­cu­rate in­for­ma­tion dur­ing merger in­ves­ti­ga­tions. They must take this obli­ga­tion se­ri­ously.”

What­sApp an­nounced last sum­mer that it would share user in­for­ma­tion with its par­ent com­pany for the first time, so that per­sonal de­tails such as phone num­bers and de­vice in­for­ma­tion could be used to tar­get ad­ver­tise­ments and im­prove prod­ucts on Face­book.

While a host of Sil­i­con Val­ley com­pa­nies, in­clud­ing Google, Ama­zon, Ap­ple and Mi­crosoft, have found them­selves in the EU com­pe­ti­tion au­thor­ity’s crosshairs, Face­book had largely sidestepped the reg­u­la­tory bat­tle.

But the pun­ish­ment, ex­pected to be an­nounced to­day, will be the so­cial me­dia com­pany’s third fine within a week, af­ter reg­u­la­tors in Italy and France levied charges for data pro­tec- tion and pri­vacy vi­o­la­tions re­spec­tively.

Sev­eral Euro­pean data pri­vacy watch­dogs have crit­i­cised Face­book and ap­pealed to Jan Koum, What­sApp’s co­founder and chief ex­ec­u­tive, to sus­pend shar­ing users’ data un­til the le­gal­ity of the is­sue can be re­solved.

Although Face­book sus­pended its col­lec­tion of What­sApp data for ad­ver­tis­ing pur­poses across Europe from Novem­ber, reg­u­la­tors in France, Bel­gium, Spain, Nether­lands and Ger­many have con­tin­ued to probe its wider ac­tiv­i­ties. In par­tic­u­lar, they have taken is­sue with the way it tracks users across the in­ter­net.

Both Face­book and the com­mis­sion de­clined to com­ment.

‘Com­pa­nies are obliged to give the com­mis­sion ac­cu­rate in­for­ma­tion. They must take this obli­ga­tion se­ri­ously’

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