You may remember back in February Facebook purchased the online messaging service, WhatsApp. The deal was massive in terms of both cost and implications with Facebook paying a cool $19 billion for WhatsApp. Since the acquisition, the merger has been under intense scrutiny both in the US and EU by antitrust bodies. In April the US Federal Trade Commission approved the merge between the two companies (and services) which was largely seen to pave the way for Facebook. The approval by the US did come with one important caveat insisting WhatsApp must continue its original policy of not collecting user data. To continue the melodrama this was followed by a surprise move in May in which Facebook actively asked the EU antitrust regulators to also examine and approve the merger. Although it seems unusual for a company to actively ask to be examined this was largely seen as a preemptive move by Facebook. In asking the EU as a whole to evaluate and decide on the merger avoids individual partner nations from running their own individual checks and regulations. This way Facebook avoids multiple different regulators examining the merger which in the long term would be more costly and time-consuming.
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The latest development in the ongoing saga is EU regulators have now sent out questionnaires to Telecoms operators and Facebook ‘rivals’ to seek their view on the merger. In particular the EU regulators are keen to find out what these companies think will be the impact of such a massive merger. With WhatsApp already claiming over 600 million active users the merge will grant Facebook an immediate foothold in this market and the regulators are interested to see how this will impact on the market as a whole. The questionnaires are reported to contain questions in relation to whether they (the rivals) think the merge will have a ‘positive, negative or neutral’ impact on the market for users and to explain why. Some of the examples used in the questionnaire as negative impacts include price rises and the deterrence of innovation. Lastly, the EU regulators also seem interested in whether both users and competitors will be able to effectively (and without difficulty) use alternative services. For instance will users find it difficult switching to an alternative service and will competitors be able to expand its user-base or be limited by the merger monopolizing the market.
It is expected the EU Commission will conclude and announce its decision by October 3rd and Facebook seem keen to have the whole process fully wrapped up by the end of the year. What do you guys think? Are you happy with the merger between Facebook and WhatsApp? With Facebook having over a billion users and WhatsApp aiming to be the first messaging service to surpass a billion users it is almost certain anyone reading this uses one of the two services. As the regulators would ask do you see this merge as a positive, negative or neutral aspect for the industry?