For providing “misleading information” about its acquisition of messaging service WhatsApp, Facebook has been fined 110 million euros ($122 million) by European regulators. The fine was announced on Thursday by the European Commission, the European Union’s executive arm.
“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,” EU Commissioner Margrethe Vestager said in a statement.
“The Commission must be able to take decisions about mergers’ effects on competition in full knowledge of accurate facts.”
WhatsApp was bought over by Facebook for $19 billion. The linking of Facebook accounts to WhatsApp user identities is at the center of the Commission’s issue. Facebook told it that there was no possibility to establish “reliable automated matching between Facebook users’ accounts and WhatsApp users’ accounts”, the Commission said in 2014.
But the possibility of linking accounts from both platforms was raised when in 2016, Facebook released an update to its terms of service.
“By coordinating more with Facebook, we’ll be able to do things like track basic metrics about how often people use our services and better fight spam on WhatsApp,” the messaging firm said in a blog post at that time.
“And by connecting your phone number with Facebook’s systems, Facebook can offer better friend suggestions and show you more relevant ads if you have an account with them.”
But the U.S. firm was aware that such a possibility existed, contrary to Facebook’s statements in 2014 saying it wasn’t able to link accounts, said the Commission.
However, the EU body’s previous decision to approve the acquisition would not be impacted by the fine.
“The Commission at the time also carried out an ‘even if’ assessment that assumed user matching as a possibility. The Commission therefore considers that, albeit relevant, the incorrect or misleading information provided by Facebook did not have an impact on the outcome of the clearance decision,” a Commission statement read.
Any ongoing national antitrust or data protection issues that may arise following the update that WhatsApp rolled out in 2016 was unrelated to Thursday’s fine, it added.
The information it provided was correct to the best of its knowledge, Facebook said.
“We’ve acted in good faith since our very first interactions with the Commission and we’ve sought to provide accurate information at every turn. The errors we made in our 2014 filings were not intentional and the Commission has confirmed that they did not impact the outcome of the merger review,” a Facebook spokesperson said.
“Today’s announcement brings this matter to a close.”
If it intentionally or negligently provides incorrect or misleading information about a merger or acquisition, a company can be fined up to 1 percent of its aggregated turnover under European Union rules.
Facebook’s infringements “are serious because they prevented it from having all relevant information for the assessment of the transaction”, the Commission said.
But the Commission has taken this into account when setting the fine the cooperation that Facebook did in the investigation into the WhatsApp takeover, the EU body said.
On the basis of these factors, the Commission has concluded that an overall fine of 110 million euro is both proportionate and deterrent,” it said.
(Adapted from CNBC)