European Union fines $122 million on Facebook over misleading WhatsApp data
- Author: Zachary Reyes May 20, 2017,
May 20, 2017, 15:47
The European Union has fined Facebook 110 million euros ($122 million) for providing misleading information over its buyout of mobile messaging service 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 European Commissioner for Competition Margrethe Vestager.
It noted that when Facebook notified the Commission of the acquisition in 2014, the company had said it would "be unable to establish reliable automated matching between Facebook users' accounts and WhatsApp users' accounts".
Facebook tried to save face claiming that it had originally acted in good faith in its deliberations with the antitrust officials and that it was not going to appeal the penalty.
European Union rules allow the Commission to impose fines of up to 1% of the aggregated turnover of companies in such cases - Facebook turned over $27.6 bn in 2016 so the fine is less than half the maximum possible, reflecting the company's "cooperation.during the procedural infringement proceedings" and its "acknowledgement of its infringement of the rules". The Commission considered the infringements serious because they were prevented from having all relevant information for the assessment of the transaction.
In a statement Facebook said the errors were not intentional and noted that the commission confirmed these submissions had not changed the outcome of the merger inquiry.
She described the fine - for hiding the company's hypothetical ability to match up users' activity on Facebook.com with their behavior elsewhere on line - as "proportionate".
The Commission has found that, contrary to Facebook's statements in the 2014 merger review process, the technical possibility of automatically matching Facebook and WhatsApp users' identities already existed in 2014, and that Facebook staff were aware of such a possibility.
According to the annual turnover rule, Facebook earned $276m in 2016 - so the fine could have been a lot more.
Last year, however, WhatsApp announced plans to share users' phone numbers and other information with Facebook, which said it would draw on those numbers to make friend suggestions to WhatsApp users, and also send them targeted ads.
In 1999, a German postal operator was fined Euro 100.000 for supplying incorrect and misleading information in a notification and inaccurate information in response to a request for information (RFI).