Facebook (FB) gets approval for WhatsApp merger
Facebook announced it would buy WhatsApp for $19 billion in February, but the deal couldn't be finalized until it got regulatory approval. On Friday, the European Commission announced an unconditional approval of the merger, making it the biggest acquisition in Facebook's history.
Whatsapp App's logo is seen behind a phone that is logged on to Facebook in Bosnia. Users of a third party WhatsApp app found themselves booted from the service for 24 hours after WhatsApp began a crackdown on the third party app for security flaws.
Dado Ruvic/Reuters/File
After months of waiting, Facebook has been approved to buy the messaging app WhatsApp, which will be Facebook's biggest acquisition to date.
On Friday, the European Commission unconditionally approved the acquisition. Facebook announced the proposed purchase of WhatsApp for $19 billion in February. WhatsApp is a low cost messaging app and has 600 million users worldwide. Facebook has 1.3 billion users worldwide and 300 million of them use the Facebook Messenger app. The commission was worried that the two messaging apps were close competitors and their merger would harm competition in the messaging market. They ultimately found that there are enough mobile messaging apps that the merger wouldn't hurt competitors.
“Consumer communications apps keep European citizens connected and are becoming increasingly popular," EU Competition Commissioner Joaquin Almunia wrote in a statement. “While Facebook Messenger and WhatsApp are two of the most popular apps, most people use more than one. We have carefully reviewed this proposed acquisition and come to the conclusion that it would not hamper competition in this dynamic and growing market.”
"We are pleased to have received clearance from the European Commission and look forward to closing the acquisition," a Facebook spokeswoman said in an e-mailed statement.
The Facebook-WhatsApp merger was seen as a test for how the European Commission would apply competition law to the world of social media. Telecom operators, such as Deutsche Telekom, Orange, and Telecom Italia, were lobbying the commission to stop the deal amid concerns that it would give excessive market share and too much control over users' data. The telecom industry argued that WhatsApp, Skype, and Netflix all use telecom infrastructure but aren't taxed or regulated like telecom companies.
To see if the Facebook-WhatsApp merger would hurt competitors, the European Commission sent two questionnaires, one almost 70 pages long, to market participants to get a feeling for competition in the market. The commission found that the Facebook-WhatsApp merger wouldn't dramatically change the mobile messaging market.
"[E]ven in the event of an integration between WhatsApp and Facebook such that Facebook's position in social networking services could be strengthened, the net gain in terms of new members of the social network would be limited, since the user base of WhatsApp already overlaps to a significant extent with that of Facebook," the commission said in a statement.
The Facebook-WhatsApp merger was approved by US regulators in April.
WhatsApp isn't Facebook's most recent purchase. The company has made a number of multi-billion acquisitions recently in an attempt to diversify the company. In July, Facebook paid $2 billion for Oculus VR, a company that makes virtual reality headsets. Facebook believes virtual reality will be a major communication device in the future.