EU approval for $19bn takeover of WhatsApp

Facebook gained European Union clearance for its proposed $19bn takeover of mobile messaging startup WhatsApp in a deal setting it against the telecoms industry.

EU approval for $19bn takeover of WhatsApp

The landmark deal is the largest in Facebook’s 10-year history and will give it a strong foothold in the fast-growing mobile messaging market.

WhatsApp is poised to become a potentially powerful rival to telecoms companies with its plan to add free voice-call services for its 450m customers later this year.

The Commission said the Facebook-WhatsApp deal would not hurt competition.

“We have carefully reviewed this proposed acquisition and come to the conclusion that it would not hamper competition in this dynamic and growing market.

“Consumers will continue to have a wide choice of consumer communications apps,” European Competition Commissioner Joaquin Almunia said.

WhatsApp and its rivals such as KakaoTalk, China’s WeChat and Viber, have in recent years won over telecoms customers with a free text messaging option, posing a serious threat to the sector’s revenues from this business, which totalled about $120bn last year, according to market researcher Ovum.

WhatsApp — launched in 2009 — has 600m users globally. Facebook chief Mark Zuckerberg hopes it will reach a billion in a few years.

The powerful European telecom lobby had argued that Facebook and Whatsapp together would have access to an unfair stock of user data and gain an unfair competition advantage in the crucial data and consumer habit market used by advertisers.

The Commission turned down this argument concluding that, regardless of whether Facebook would start collecting WhatsApp user data, “the transaction would not raise competition concerns”.

After the merger, “a large amount of internet user data that are valuable for advertising purposes are not within Facebook’s exclusive control,” the Commission said.

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