Facebook Under Fire In Europe Over Whatsapp Deal

Facebook (NASDAQ:FB) is facing accusations in Europe that it misled regulators to receive regulatory approval for its $19 billion purchase of internet messaging service WhatsApp. Margrethe Vestager, Europe’s competition chief, said Facebook did not outline its plans to match people’s Facebook accounts with those on WhatsApp. Facebook announced that it would start sharing some people’s digital information between the two services in August.

The move to share the data would link WhatsApp to Facebook’s increasingly powerful online advertising business model. The popular messaging app now has more than a billion users worldwide. Many Europeans also use popular internet services like Facebook Messenger and Instagram, which is also owned by the company.

A German privacy regulator ordered the company to stop sharing people’s details between the two platforms a month after the announcement, followed by regulators in Britain. By the end of October, Facebook had shut down the data-sharing program across all of the 28-member European Union. Europe has some of the toughest privacy and competition rules in the world.

Ms. Vestager said the potential of such linking was not explained while the social network was seeking regulatory approval for the purchase. Ms. Vestager said in a statement, “Companies are obliged to give the commission accurate information during merger investigations.” She continued on to say that companies “must take this obligation seriously.”

Facebook has until the end of next month to respond to the charges. The accusation could lead to a fine of up to 1 percent of Facebook’s yearly revenue, roughly about $200 million. Any legal appeal against the potential decision could take years to resolve.

Facebook said that it had acted in good faith and that the company had contacted the European Commission, the executive arm of the European Union, about its new plans at the beginning of this year. Facebook spokeswoman Sally Aldous said in a statement, “We will continue to cooperate and share information officials need to resolve their questions.”

Tension has been growing between Facebook and Europe’s policy makers over its digital businesses. Critics have taken on the company over its lack of transparency with its algorithms and how items end up on user’s feeds. The social network is being investigated over how it uses people’s digital data. Concerns over hate speech and fake news have also dogged the company in recent months.

Facebook is facing similar issues in the United States. In November, the company was pilloried for allowing fake news to proliferate on its platform, potentially affecting the outcome of the U.S. presidential campaign. The company has denied the allegations, but says it will do more to remove fake news stories and hate speech from the site.

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