
Facebook fined €110M for providing misleading information on WhatsApp takeover - antr
http://europa.eu/rapid/press-release_IP-17-1369_en.htm
======
jakozaur
Given that FB paid $19 Bln for WhatsApp, €110m seems to be a cost of doing
business for Facebook. That may be calculated play.

USA got very liberal antitrust policy, allowing massive M&A. Good for
shareholders, bad for everybody else.

E.g. the biggest four airlines in USA got over 80% market share. In Europe
they just have 48%. That's why United can re-accommodate passenger and get
away with it:

[http://www.economist.com/news/leaders/21721201-americans-
are...](http://www.economist.com/news/leaders/21721201-americans-are-treated-
abysmally-their-airlines-they-should-look-europe-lessons-lack)

~~~
briandear
What's the Lufthansa market share in Germany? What's the Air France market
share in France?

~~~
koyote
Here's a good chart illustrating domestic market share in European countries:

[http://www.anna.aero/2011/02/02/aegean-olympic-merger-
denied...](http://www.anna.aero/2011/02/02/aegean-olympic-merger-denied-due-
to-domestic-dominance/)

A part from Air France almost every country's dominating carrier has around
60% or less. And this is for domestic travel only, which is not very extensive
due to the smaller size of European countries and the vast reach of high-speed
rail.

If you look at international travel the main carriers have massive amount of
competition from low-cost carriers as well as airlines from other European
countries:

[http://www.anna.aero/wp-content/uploads/2011/03/air-
france-3...](http://www.anna.aero/wp-content/uploads/2011/03/air-france-3-cht-
airline-int-share.png)

------
awjr
The EC asked FB if it was possible to link accounts from Whatsapp to FB in
2014. They said no, knowing full well that the answer was yes.

The EC did the merger evaluation with the assumption that they could.

In 2016 FB announced they were linking accounts in a ToS update.

It is not that they could or could not do it, but that they knew they could,
but chose to hide that fact.

~~~
mtgx
I've lost track of how many times Facebook has done this, including all those
times it was resetting people's privacy settings to being _more public_.

~~~
loceng
I keep wondering how Mark justifies this to himself.

~~~
r00fus
Probably along the lines of "I'm Mark, why do I have to justify myself?"

~~~
treebeard901
I'm not sure justification has ever really been a problem for him. I assume
this is a real quote from the early years:

Zuck: Yeah so if you ever need info about anyone at Harvard

Zuck: Just ask

Zuck: I have over 4,000 emails, pictures, addresses, SNS

[Redacted Friend's Name]: What? How'd you manage that one?

Zuck: People just submitted it.

Zuck: I don't know why.

Zuck: They "trust me"

Zuck: Dumb fucks

~~~
meowface
It's probably real, but we also don't know the full context. It could be a
banter-y way of him introducing Facebook to a friend who hadn't heard of it,
or something, and he could've just been kidding about actually giving
information. Who knows for sure?

But knowing everything we know about Facebook now, it's probably more than
likely true.

------
thr0waway1239
>> According to the Merger Regulation, the Commission can impose fines of up
to 1% of the aggregated turnover of companies, which intentionally or
negligently provide incorrect or misleading information to the Commission.

Anyone read this and imagined the Facebook lawyers saw this clause, and said
to Mark "Yes, the ROI on providing misleading information is _completely in
Facebook 's favor_"

~~~
feintruled
Makes me wonder if this sort of thing isn't a more civilised version of the
bribe. "Tell us what we need to hear to drive this through and we'll fine you
later." The beauty of the system being that no-one ever needs to explicitly
offer or ask for money.

~~~
bryanrasmussen
the more civilized version of the bribe then also goes to the government as a
whole instead of into the pockets of officials

~~~
lotsofpulp
The more civilized version of the bribe also gets officials a nice job with
the bribe payer.

~~~
bryanrasmussen
not sure how much the revolving door revolves in the EU.

------
torrent-of-ions
"Today's decision sends a clear signal to companies that they must comply with
all aspects of EU merger rules..."

More like:

"Today's decisions sends a clear signal that it costs €110M to escape EU
merger rules."

------
nomercy400
You should see it like this: 110 million euros to buy the permission to
acquire all the data of all european WhatsApp users.

Is this just the fine for lying? Or is this also the fine for combining
personal information about european citizens?

If only the fine for lying, then what the EU should do next is investigate the
privacy concern. And possibly another fine could be the result of that.

~~~
kbart
Yes, I was shocked that earlier conclusion was left standing. That's like
being caught robbing a bank, but let to keep the stolen bags of money and just
ordered to pay a parking ticket for a getaway car waiting outside on a
sidewalk. That's a very bad precedence and message to future deals, that it's
OK to ignore EU laws if you are ready to pay small (comparatively) amount of
money for it.

~~~
riffraff
the merger was approved accounting for user matching ("'even if' assessment
that assumed user matching as a possibility").

Knowing this in advance would have not changed the approval from the
commission, your comparison is wrong, and it would set a bad precedent only
for people who didn't actually read the case.

------
ykler
It is obvious that it would be possible to match accounts in a great many
cases, and if the commission wanted to know more precisely how good the
matchings could be, it seems like it would make more sense for them to ask
Facebook and WhatsApp for social graph data and hire their own scientists to
investigate that than to trust Facebook's answers on such a subjective point.
But really it seems like they must have basically just been OK with Facebook
monopolizing messaging because it was obviously pretty terrible for
competition to allow this merger even assuming they thought the users of
Facebook and WhatsApp wouldn't be able to be merged very well. However, I
would be really curious to hear from someone who knows something about their
actual thinking and motivations (and I guess what the law says since they may
be quite constrained by that).

------
mike-cardwell
Why a fine? Why aren't they being banned from operating WhatsApp in the EU?
And being forced to delete any data connecting the accounts to Facebook
accounts if they want to continue operating Facebook within the EU?

~~~
cbg0
Because they can only fine the company, according to the regulation
[http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:320...](http://eur-
lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32004R0139)

------
p49k
In other words, less than 0.7% of the amount Facebook paid for WhatsApp.

~~~
wellboy
It's a bit more, since most of the $19B ($15b afaik) was FB stock.

So $110M might be more like 3.5% instead of 3.5% or 10% of their yearly
profit. Still not that much, but also not nothing.

------
0verc00ked
Well of course they were aware. And the Commission should have been aware.
Here's a quote that stuck out to me:

 _“Consumer communications services: the Commission found that Facebook
Messenger and WhatsApp were not close competitors and that consumers would
continue to have a wide choice of alternative consumer communications apps
post-merger”_

The first part doesn’t sound right. If WhatsApp and Facebook Messenger aren’t
close competitors, I need to figure out what a competitor is. Hmmm..
[http://www.businessdictionary.com/definition/competitor.html](http://www.businessdictionary.com/definition/competitor.html)

I suppose it's because they are not rivals? They were pre acquisition. Because
they definitely operate in a similar industry with a similar product/service.
It’s true that consumers can choose to use alternatives.

~~~
wayn3
They are concerned about actual monopolies.

There are hundreds of messenger apps out there that roughly work the same way.
If facebook suddenly charged $100/day for whatsapp, people would just use
something different. Like Kik or whatever. Its true that those competitors
dont really have market share. But thats not the point. They exist and are
readily accessible. If facebook wants to shoot itself in the foot in trying to
force its customers to use their competitors, thats just healthy competition.

Therefore, there's no real threat of a monopoly here. Facebook bought a
network effect, not a monopoly.

Compare that to something like mobile carriers. If At&t buys verizon and
spring or whatever they're called, there ARE no other options.

Antitrust laws are mostly about keeping market mechanics in tact. Facebook and
Google cant really force anyone to use their products. If their products are
too expensive, there are lots of competitors. That's why they want to get rid
of net neutrality. Making it expensive to run competing services strengthens
their position.

------
sambe
Bit off-topic, but the end of the article lists the three reasons the original
deal was cleared. They seem naive to the point of absurdity: Facebook
Messenger and WhatsApp were "distant competitors"? They are number one and two
messaging apps in my circle of friends and acquaintances.

------
easilyBored
_Facebook fined €110M for providing misleading information on WhatsApp
takeover_

Should be fine plus undoing what they did. or spin Whatsapp...go back to
square one.

------
hobarrera
Gee, it was stupidly obvious that Facebook could automate crossing
information:

* It constantly prompts people for their phone numbers (and most people provide it). * For new accounts, is REQUIRES a phone number.

Whatsapp accounts are based on phone numbers.

Isn't it quite obvious how easy it is to cross accounts? Do I REALLY need to
spell this out further?

~~~
Markoff
you can have dual SIM phone

~~~
hobarrera
Facebook affirmed they could not cross information between their users and
whatsapp users. Dual SIMs are irrelevant to this, a very very small minority
of the users will be providing using this feature to have separate numbers of
facebook and whatsapp.

------
interfixus
I don't get it. How could anyone be deceived? How could anyone _imagine_ that
anyone could be deceived? How could anyone assume - how could it technically
be the case - that data from one system should not be mergeable with data from
another?

~~~
techstrategist
The deception does not have to be believed to be a deception. Facebook
explicitly lied to the EC:

"When Facebook notified the acquisition of WhatsApp in 2014, it informed the
Commission that it would be unable to establish reliable automated matching
between Facebook users' accounts and WhatsApp users' accounts."

"The Commission has found that, contrary to Facebook's statements in the 2014
merger review process, the technical possibility of automatically matching
Facebook and WhatsApp users' identities already existed in 2014, and that
Facebook staff were aware of such a possibility."

~~~
Markoff
why did they approve it after finding they are already lying?

------
MiddleEndian
Fines like this are mostly pointless, a cost of doing business.

If governments want to stop being defrauded by corporations, they need to
respond with criminal penalties like imprisonment, the same as they would to a
regular citizen.

~~~
utternerd
We throw people in jail far too often as it is, and you want to add to the
prison population for something that didn't harm anyone? I honestly don't
follow. If this were executives covering up the harmful effects of their
product on humans, I'd agree.

The Government makes the vast majority of their money off corporate profits,
so they have a vested interest in seeing them succeed.

~~~
MiddleEndian
I do agree that we throw people in jail too often, but if we're going to let
corporations straight up lie for a low price, what we're charging is a usage
fee, not a penalty.

------
stefek99
What would happen if they told the truth?

Why investigating after the fact, not during the M&A?

~~~
wayn3
Because the european commission likely has no executive antitrust agency that
would be capable of overseeing this.

------
baahh3333
110 million is nothing for Facebook in comparison with the treasure trove of
data and user identities they have conveniently "acquired" from all the
countries which are using Whatsapp.

------
sandov
I Guess it's time for people to switch to a better IM platform. I'm tired of
having to use WhatsApp because everyone else does.

------
welpwelp
Who's profiting from these 110M? :3

------
timow1337
I'm in favor of the ruling but I don't understand why the European commission
has any authority over two american companies merging?

~~~
adamnemecek
Because they are doing business in said counties.

------
flexie
Please, start regulating and taxing these multinational advertising companies
much more aggressively.

Once advertising companies like Facebook or Google reach a certain size, they
should be required to pay taxes where the ads are shown to users.

Make a set of basic EU user terms and privacy policy for advertising companies
masked as social networks, search engines, email providers etc, some of it
mandatory, some of it that they can opt out off. But advertising companies
above a certain size shouldn't be allowed to set their own (American) terms.

And please, split up these behemoths. It's not good for anyone that one search
engine and one social network rules it all. They have EU-wide market shares
above 90 percent. We would never allow that in industries as automobiles or
television. We would never allow it for newspapers or tv stations. Somehow, we
allow it for social networks and search engines.

~~~
jondubois
This is an excellent idea. Advertising ought to be taxed like Tobacco.
Advertising is responsible for the increased monopolization of the economy,
inequality, urbanization, over-consumption, greed, depression and many other
issues... Advertising is a cancer on society. It doesn't offer any value to
the consumer (at least Tobacco offers some temporary pleasure), it must be
taxed harshly.

~~~
mifreewil
As much as I hate ads, it's just not true that they don't offer any value.
They often can and do inform consumers and businesses of products that will be
of value to them. They often though advertise things that are also of the
opposite (negative value) and play on human weaknesses.

~~~
amelius
> it's just not true that they don't offer any value

On the plus side:

\+ Inform users about products (which is a small convenience).

On the negative side:

\- They provide unsollicited information, which distracts and irritates users.

\- Users can also search products by themselves (no hand-holding needed).

\- They use screen real estate.

\- They use bandwidth.

\- They use energy.

\- They make websites slower.

\- They introduce security problems.

\- They track users, collect their data.

\- They put users in an information bubble.

\- Market failure: not the "best" product wins, but the one with the biggest
advertisement budget behind it.

\- They make people feel inconfident (see photoshopped fashion ads)

So, any value offered by ads is easily canceled by the negative points listed
above.

~~~
dkfmn
You forgot the largest plus: Ads pay for many useful and enjoyable services
that are free for the consumer (or cheaper). Things like broadcast television,
local news, most of the internet, games, concerts....

I don't disagree that there are many cons, but it's disingenuous not to
include the services they power as one of the pluses.

Full disclosure: My career involves ads.

~~~
amelius
Agreed, I should have included that.

But I can add another minus: ads as a monetization scheme are unnecessarily
restrictive, since the only way for an organization to increase their prices
is to jump from an ad-based scheme to a paid scheme, and this jump is too big
in many cases. Instead, if we paid for everything with money (not with data),
then pricing would be more clear and there would not be any threshold in
changing prices.

~~~
dkfmn
I'm not sure I fully understand, this would be pay walls on everything
wouldn't it? If so, I agree it greatly increases pricing clarity but I'm not
convinced it's an improvement necessarily.

I'd also mention that many freemium businesses actually introduce paid models
to control costs rather than improve profitability - particularly true for
streaming media companies.

------
RodericDay
> I used to be as against ads as you are, and then I tried to start a business

> Overall, I'm in mild agreement that society would be better if it weren't
> ad-driven, but that's a utopian ideal

Sounds like the typical conservative spiel. "I used to be idealist like you
once, but then I realized how the world really works and sold out".

There's a short mini-doc freely available out there, made by an heir of the
Johnson & Johnson family, about the 1%. He was inspired to do this partly
because his father had, in his day, gone out of his way and caused trouble by
participating in some controversial (at the time) anti-apartheid
demonstrations. However, he was now berating his son for his "idealism" in
discussing the issue of inequality, coming off as insanely hypocritical in the
process.

It's a really poor way of arguing a point, imo.

~~~
dahart
> Sounds like the typical conservative spiel.

That's hilarious; most people who know me consider me a socialist.

> There's a short mini-doc

I've seen it, and it's fantastic. It's not about advertising.

> It's a really poor way of arguing a point, imo.

That's hilarious coming on the heels of an ad-hominem. Do you have any counter
argument? Poor as it is, it's true, I'm sharing my feelings as someone with
experience on both sides. The person I replied to, and you, and me, we all
have the power within us to make ads irrelevant to our lives. And yet we
don't. Why? The person I replied to seems to suggest he has an inalienable
right to consume free content. Is that true? Does he deserve high quality free
content, ad-free? Is it really the advertisers' fault that ads exist? Do you
believe that taxing advertisers is the solution to reducing the scourge of
ads?

Anyway, I've upvoted you for making me laugh.

------
SkeptinenSpede2
Facebook is known by lies and privacy violations, is this even news worthy ?

------
foota
I'm not sure I agree with this ruling. The question as stated is whether fb
would be "unable to establish reliable automated matching between Facebook
users' accounts and WhatsApp users' accounts" and it seems to me that matching
based on entered phone numbers isn't really automatic - since it's only
possible for those that enter their number, and is a manually commenced
process.

~~~
iicc
Facebook aren't matching phone numbers, they're overlaying social graphs.

They know who you are based on who else's phone book/friends list you show up
in.

WhatsApp uploads the whole phone book - it doesn't matter if the numbers
correspond to WhatsApp users or not.

