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Active Stock: EU Begins Questioning Facebook (NASDAQ FB) Rivals Over WhatsApp Deal

July 14, 2014

European Union antitrust officials have started questioning rival firms about Facebook Inc (NASDAQ FB)’s proposed $19 billion acquisition of messaging service WhatsApp, ahead of a formal review that could be a test case for how to apply EU competition law to social media.

Officials at the European Commission, the EU’s central competition authority, have in recent weeks sent detailed questionnaires to several technology and online-messaging companies, asking about the merger’s effect on competition in their markets, according to people familiar with the matter.

The questionnaires also drill down into a relatively new area for merger reviews: how the companies control and use personal datawhen they offer services, some of the people said.

Facebook Inc: EU to question Facebook

The commission’s questioning of rivals comes before the EU opens a formal merger review that will provide one of the first in-depth looks at the app economy and social media through the lens of competition law, antitrust lawyers and technology executives say. Europe’s influential telecoms industry has also been lobbying against the merger, arguing that “over-the-top” operators like WhatsApp use telecom companies’ infrastructure but aren’t taxed or regulated in the same way.

While European authorities have previously reviewed deals with instant messaging and video messaging, such as Microsoft’s purchase of Skype, they have yet to weigh in on any deals involving those tools in the context of social media. Personal data and privacy haven’t previously played roles in competition reviews, but some regulators and privacy advocates have said that is likely to change.

Facebook Inc (NASDAQ FB) Business News

The EU initially wasn’t expected to review Facebook’s WhatsApp deal because the messaging app doesn’t have sufficient revenue in the region to trigger the bloc’s merger law. But in May, Facebook (NASDAQ FB) used a provision of the EU law to ask the commission to conduct a single review that would cover the 28-nation bloc, rather than face the possibility of separate reviews in three or more EU countries. Whether Facebook is allowed to go ahead with the deal remains to be seen.

(By Richard Atkins)